Hong Kong: HANG SENG INDEX (.HSI) HSBC Misses Key Growth Forecasts

Hong Kong: HANG SENG INDEX (.HSI) HSBC Misses Key Growth Forecasts

Hong Kong: HANG SENG INDEX (.HSI) HSBC Misses Key Growth Forecasts

Despite an apparently vigorous pre-tax profit and revenues for 2018, HSBC Holdings plc and its operational results fell woefully short of analysts’ expectations and were punished with a 2.7% drop in its stock price at Hong Kong’s Hang Seng index today.

Europe’s largest bank unveiled a financial report card that missed expectations on key metrics. This might have been due to a difficult Q4 2018 when markets worldwide were pummeled by painful sell-offs and weaker activity.

For 2018, HSBC reported a pre-tax profit of $19.89 billion, which is 15.9 percent higher year-on-year. Revenue last year came to $53.78 billion, up 4.5 percent higher than from 2017.

On the other hand, HSBC was expected to attain a 23.8 percent jump in pre-tax profit to $21.26 billion, according to forecasts compiled by Refinitiv. Revenue was projected to be 6.28 percent higher at $54.674 billion.

The disappointing revenue growth caused HSBC to miss its positive “jaws” target for 2018. At HSBC, the jaws ratio is positive when revenue grows faster than costs. HSBC’s jaws for 2018 came to a minus 1.2 percent.

“We were very disappointed to have missed that jaws target for the year,” said HSBC Group Chief Financial Officer Ewen Stevenson.

He said the bank will continue to work toward achieving a positive jaws ratio in 2019. And despite the bank missing forecasts, Stevenson said he was “very pleased” with the latest results. He noted that the difficult trading environment at the end of 2018 resulted in lower fourth-quarter revenue compared to the previous three months.

Overall, the bias in prices is: Upwards.

Note: this chart shows extraordinary price action to the upside.

By the way, prices are vulnerable to a correction towards 27,316.63.

The projected upper bound is: 29,131.58.

The projected lower bound is: 27,366.53.

The projected closing price is: 28,249.05.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 7 white candles and 3 black candles for a net of 4 white candles. During the past 50 bars, there have been 31 white candles and 19 black candles for a net of 12 white candles.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 45.4975. This is not an overbought or oversold reading. The last signal was a sell 2 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 62.94. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 2 period(s) ago.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 90. This is not a topping or bottoming area. The last signal was a sell 0 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 1 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -118.879 at 28,228.131. Volume was 3% below average (neutral) and Bollinger Bands were 14% narrower than normal.

Open High Low Close Volume___
28,440.49028,488.97128,208.86928,228.1311,704,254,592

Technical Outlook
Short Term: Neutral
Intermediate Term: Bullish
Long Term: Bullish

Moving Averages: 10-period 50-period 200-period
Close: 28,158.81 26,749.95 27,718.80
Volatility: 17 21 23
Volume: 1,570,218,496 1,670,762,496 1,827,048,704

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

HANG SENG INDEX is currently 1.8% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .HSI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on .HSI and have had this outlook for the last 23 periods.

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