Hong Kong: HANG SENG INDEX (.HSI) revised down its estimate for economic growth this year as political unrest grips the city

Hong Kong: HANG SENG INDEX (.HSI) revised down its estimate for economic growth this year as political unrest grips the city

Hong Kong: HANG SENG INDEX (.HSI) revised down its estimate for economic growth this year as political unrest grips the city

Hong Kong revised down its estimate for economic growth this year as political unrest grips the city, with the government now forecasting the first annual contraction since the global financial crisis a decade ago.

Gross domestic product will contract 1.3% in 2019 from the previous year, the government said Friday as it released final output calculations for the third quarter. In the three months to September, GDP contracted 3.2% from the previous quarter, the government said, confirming an initial estimate.

The grim outlook brings the official view of the economy in line with what’s visible in Hong Kong’s streets, with shopping malls, restaurants and stores shuttered or on shorter hours in many districts amid unpredictable and often violent protests against the government.

“The Hong Kong economy saw an abrupt deterioration in the third quarter of 2019, as the local social incidents dealt a very severe blow to an economy already weakened by a synchronized global economic slowdown and US-Mainland trade tensions,” the government said in a statement. “As the impacts of the local social incidents have yet to show signs of abating, consumption and investment demand will likely remain in the doldrums for the rest of the year.”

Hong Kong protesters began gathering and blocking roads in the Central financial district and other parts of the city on Friday, ending a work week in which Asia’s premier financial hub has been paralyzed.

The government cited a nosedive in private consumption activity as well as a sharp decline in investment expenditure as contributing to the slump. Net exports also contracted from a year earlier due to the worsening global outlook.

The forecast for full-year consumer price inflation was revised upward to 2.9%, with officials citing the pork supply crisis in mainland China as a contributing factor.

While the unemployment rate remains low at 2.9%, the government said that the reading for consumption-related sectors, hardest hit by the protests, showed “visible increases.”

Since the start of protests in June, Financial Secretary Paul Chan has announced stimulus worth about HK$21 billion ($2.7 billion), an amount that economists say falls short.

“The Hong Kong government has missed the boat on fiscal stimulus to provide much needed support to the economy,” Alicia Garcia Herrero, chief Asia economist at Natixis in Hong Kong wrote in a note after the data. “The stimulus announced so far only accounts for 0.7% of GDP, which is highly disproportionate to the current difficult time.”

Early readings for the fourth quarter suggest worsening damage to the economy. A purchasing managers’ index slumped to a fresh record low, while small-business confidence and property transactions also edged down.

Technical Indicators

Overall, the bias in prices is: Downwards.

By the way, prices are vulnerable to a correction towards 26,773.73.

The projected upper bound is: 27,035.63.

The projected lower bound is: 25,609.83.

The projected closing price is: 26,322.73.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 5 white candles and 5 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black candles.

Three black candles occurred in the last three days. Although these candles were not big enough to create three black crows, the steady downward pattern is bearish.

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 8.1368. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 4 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 40.80. 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 5 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 -112.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 4 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 2 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed up 2.971 at 26,326.660. Volume was 26% below average (neutral) and Bollinger Bands were 12% narrower than normal.

Open High Low Close Volume___
26,529.94926,544.65026,300.08026,326.6601,180,282,624

Technical Outlook
Short Term: Oversold
Intermediate Term: Bullish
Long Term: Bearish

Moving Averages: 10-period 50-period 200-period
Close: 27,163.13 26,652.71 27,741.99
Volatility: 23 17 19
Volume: 1,534,946,816 1,561,966,336 1,766,901,504

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 5.1% below its 200-period moving average and is in an upward trend. Volatility is extremely high when compared to the average volatility over the last 10 periods. There is a good possibility that volatility will decrease and prices will stabilize in the near term. 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 11 periods.

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