The Hang Seng index rose slightly as investors reacted to mixed messages about Hong Kong. HSBC, whose share price declined by more than 1.1% was the most active stocks in the index.
HSBC share price in Hong Kong is trading at $39.85 after one of its biggest shareholders rebuked it. In a statement, Aviva Investors criticized the bank for siding with China on the national security law. The investment group also criticized Standard Chartered, another bank that it owns a substantial stake in. The statement said:
“We are uneasy at the decisions of HSBC and Standard Chartered to publicly support the proposed new national security law in Hong Kong without knowing the details of the law or how it will operate in practice.”
The announcement came after the two big banks went public about the national security law that was passed two weeks ago. In respective statements, the banks said that the law will help reduce tensions and protests in Hong Kong. US Secretary of State, Mike Pompeo, also criticized the two banks for this.
Other big companies that have supported the law are CK Asset, Galaxy Entertainment, and Henderson Land among others.
Yesterday, we reported that many international hedge funds in Hong Kong were considering leaving the city because of the security law. They argue that the law will put them at risk, especially when they criticize companies they have shorted. Most of the funds that have considered leaving have said that they will head to Singapore, a nearby city that is not controlled by China.
But, according to Bloomberg, many fund managers are still bullish on the city. According to the Hong Kong Investment Fund Association, the city will become the leading hub in Asia because of its strategic location and the integration with the Greater Bay Area. The organization is pressuring the government to allow residents within this area to be allowed to purchase fund products in Hong Kong.
Real estate companies were among the worst-performers in the Hang Seng. Wharf Real Estate declined by 4.87% while Sino Land declined by 2.56%. Henderson Land, CK Hutchison, and WSHK dropped by more than 1%. HSBC share price fell by 0.50%. On the other hand, Tencent share price rose by more than 2.44% while China Resources Land, HKEX, and Sino Biopharma rose by more than 1%.
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On the daily chart, the Hang Seng index is trading close to the 50% Fibonacci retracement level. This retracement is drawn by connecting the highest and lowest levels this year. The price is above the 50-day and 100-day exponential moving averages. I expect the upward trend to continue so long as bulls can clear the current resistance.
On the flip side, a move below the 38.2% retracement will invalidate this trend. This price is also along the 50-day EMA.