CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
☰
CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.
Open account
✖

Hang Seng trading like an index with significant risks attached

Article By: ,  Market Analyst
January 17, 2024 5:00 AM
  • Hong Kong’s Hang Seng is trading down nearly 3% today
  • The index has broken another layer of technical support, leaving the pandemic lows in play
  • China’s population declined by 2 million last year while new home prices slumped by the most in nearly a decade last month

Hong Kong’s Hang Seng is arguably the ugliest index chart in the world right now, tumbling again on Wednesday, moving it closer the pandemic lows hit in October 2022. A technical break, combined with news China’s population fell by two million people last year while home price slumped at the fastest pace in nearly a decade, taking its toll on financial and property developer stocks.

While markets were initially fixated on the nation’s GDP growth, industrial output and retail sales figures released on Wednesday, it was headlines showing China’s population decline accelerated further in 2023 that really did the damage, coming hot on the heels of a sperate report showing new home prices skidded 0.4% last month, the fastest drop since early 2015.

The worrying headlines, adding to already ample concerns about the health of China’s property sector, arrived the day after the Hang Seng broke yet another layer of technical support, likely exacerbating the scale of the decline.

You can see why I describe it as one of the ugliest charts going around right now. The index has now halved from the highs hit in early 2021, reflecting policy, geopolitical, earnings and credit risks.

It would have been optimal to have shorted the index following the technical break on Tuesday, but with the index now oversold on RSI and stimulus chatter only likely to ramp up following the data dump, selling now is a high-risk setup. But if we were to see a squeeze back towards prior support at 15936, it will improve the risk-reward ratio for those considering shorts targeting a move to 14582, the pandemic lows of 2022. Below that, we’re talking GFC lows.

While some may be willing to take the punt and go long on hopes for a stimulus speculation squeeze, remember additional measures are likely already factored in. The index is also a clear sell-on-rallies prospect right now.

-- Written by David Scutt

Follow David on Twitter @scutty

 

How to trade with City Index

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

  1. 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

  2. Search for the market you want to trade in our award-winning platform 
  3. Choose your position and size, and your stop and limit levels 
  4. Place the trade

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.

© City Index 2024