The Hang Seng remains in freefall, Alibaba below 100

Equity investors have been attacked on multiple fronts

Global equity markets have suffered these past two weeks since Russia invaded Ukraine. But it should be remembered that these markets were already under pressure ahead of the invasion. There had been a build-up of tensions this year, as Russia had actually began rallying their troops back in November. Investors also had to contend with the prospects of the Fed’s tightening cycle, which then prompts either central banks to follow suit. Yet rising oil prices has rekindled fears of stagflation, which is negative for equity markets.

Hang Seng falls to a five-year low

And if we hone in-on Asia, investors also had the regulatory crackdown to contend with, which shows no signs of abating. For example, Beijing have since proposed a further tightening of the regulatory screws on the gaming industry, which has weighed on Tencent and NetEase, and of course the broader market. And as for Hong Kong, resident are living in fear of a mainland-China lockdown potentially on the horizon, and that can be clearly seen on the Hang Seng (HSI) which has fallen to a 5-year low.

We can see on the daily chart that the Hang Seng is effectively in freefall, and close -19% lower form its year-to-date high. It has since fallen below the March 2020 low which is significant, as it marks the height of the pandemic when central banks flooded financial markets with easy money. So the fact it has broken that milestone level is very telling, and the market now appears set to test 20,000 whilst prices remain below 21,328.

Alibaba’s bearish target remains in play

We highlighted Alibaba’s head and shoulders top pattern in February, and it remains very much in play. Their Q4 revenue was a disappointment which saw the market gap below the neckline and is now trading below $100. We can see that it has gapped higher on the HKEX exchange as appetite for risk is making a return. But with a multi-month downtrend and break of key support (108 – 110) last month, our downside target around $83 remains in focus. From here we would like to see bearish reversal patterns below 108 to allows for fresh shorts. And the bearish bias is invalidated with a break above $111.

Alibaba Company Profile

How to trade with City Index

You can easily trade with City Index by using these four easy steps:

Open an account, or log in if you’re already a customer

• Open an account in the UK
• Open an account in Australia
• Open an account in Singapore
Search for the company you want to trade in our award-winning platform
Choose your position and size, and your stop and limit levels
Place the trade

From time to time, StoneX Financial Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.

City Index is a trading name of StoneX Financial Pty Ltd.

The material provided herein is general in nature and does not take into account your objectives, financial situation or needs.

While every care has been taken in preparing this material, we do not provide any representation or warranty (express or implied) with respect to its completeness or accuracy. This is not an invitation or an offer to invest nor is it a recommendation to buy or sell investments.

StoneX recommends you to seek independent financial and legal advice before making any financial investment decision. Trading CFDs and FX on margin carries a higher level of risk, and may not be suitable for all investors. The possibility exists that you could lose more than your initial investment further CFD investors do not own or have any rights to the underlying assets.

It is important you consider our Financial Services Guide and Product Disclosure Statement (PDS) available at www.cityindex.com/en-au/terms-and-policies/, before deciding to acquire or hold our products. As a part of our market risk management, we may take the opposite side of your trade. Our Target Market Determination (TMD) is also available at www.cityindex.com/en-au/terms-and-policies/.

StoneX Financial Pty Ltd, Suite 28.01, 264 George Street, Sydney, NSW 2000 (ACN 141 774 727, AFSL 345646) is the CFD issuer and our products are traded off exchange.