The Hang Seng index is tumbling today as traders remain concerned about the health of the global economy as Covid-19 cases rise. The index is trading at H$24,727, which is slightly below this week’s high of $24,965. Elsewhere in Asia, the Nikkei 225 has dropped by 0.45% while the Shanghai composite has added 0.15%.
The biggest story in Hong Kong recently has been the upcoming Ant Financial IPO. The company is set to raise more than $17 billion in its Hong Kong IPO and another $17 billion in its Shanghai listing. This will make it the world’s biggest IPO and push the company to become among the leading financial technology company in the world.
Therefore, Hang Seng’s relatively weak performance is partly because some investors are selling their holdings as they wait to buy Ant’s shares when it goes public.
Hang Seng is also falling as traders wait for news from Swire Pacific and Swire Properties. Shares of the two companies were suspended today as they prepared an announcement. Swire Pacific is the biggest investor in Hong Kong’s Cathay Pacific. It is also the majority owner of Swire Properties, a large real estate investor with holdings in Hong Kong, China, and the US. Swire Pacific’s stock has dropped by more than 50% this year as travel in Hong Kong remain muted.
Financial stocks are among the worst-performers in Hang Seng today. HSBC shares, which jumped by more than 5% yesterday, are the worst-performers, having dropped by more than 2.8%. BOC Hong Kong, Ping An Insurance, Bank of China Hong Kong, ICBC, and bank of Communications have all dropped. On the other hand, the best performers in the Hang Seng are WH Group, Alibaba, Tencent, Xiaomi, and HKEX.
On the four-hour chart, we see that the Hang Seng index has been under pressure in the past two days. It is trading between the first and second resistance levels of Andrews pitchfork. It is also trading between the 50% and 38.2% Fibonacci retracement levels.
The price is also slightly above the 50-day and 25-day exponential moving averages. It is also along the descending trendline that connects the highest levels in July, August, and October.
Therefore, I believe that the trend is still bearish so long as the price is below the green descending line and between the two lines of the pitchfork.
