Hong Kong: HANG SENG INDEX (.HSI) Trade war battering smaller Chinese manufacturers, new data shows

Hong Kong: HANG SENG INDEX (.HSI) Trade war battering smaller Chinese manufacturers, new data shows

Hong Kong: HANG SENG INDEX (.HSI) Trade war battering smaller Chinese manufacturers, new data shows

Mainland China’s benchmark Shanghai Composite Index moved into bear market territory in late June. On Monday it closed down 1.21 per cent, or 32.81 points, at 2,669.49, while the CSI 300 index of larger companies lost 1.45 per cent, or 47.57 points, to 3,230.07.

The ChiNext gauge of small-caps dropped 2.41 per cent, or 34.41 points, to 1,390.82.

The Hong Kong market has had a rocky ride this year, with bad news often intertwined with good. For example, China cut the reserve requirement ratios of banks while pledging to increase spending on infrastructure investment to support growth. The 100-day volatility on the Hang Seng Index rose to its highest level in two years in 2018, according to Bloomberg data.

After the decline, the Hang Seng Index traded at 10.1 times reported earnings, Bloomberg data showed, as against a low of 8.9 times in February 2016, when the gauge started an 81 per cent run-up through to January 2017.

Hong Kong-listed stocks are now 17 per cent cheaper than the mainland’s yuan-traded equities, according to an index compiled by Hang Seng Bank to track the price gap between the two markets.

Slowing corporate earnings growth has added to the weak sentiment. The 1,375 Hong Kong-listed companies that released interim results in August posted average earnings growth of 8.8 per cent, down from a 26 per cent annual increase for 2017, according to Haitong Securities.

Overall, the bias in prices is: Downwards.

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

The projected upper bound is: 27,391.61.

The projected lower bound is: 25,741.57.

The projected closing price is: 26,566.59.

Candlesticks

A black body occurred (because prices closed lower than they opened).
During the past 10 bars, there have been 4 white candles and 6 black candles for a net of 2 black candles. During the past 50 bars, there have been 22 white candles and 28 black candles for a net of 6 black 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 15.4504. This is an oversold reading. However, a signal is not generated until the Oscillator crosses above 20 The last signal was a sell 7 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 32.33. 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 buy 50 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 -172.This is an oversold reading. However, a signal isn’t generated until the indicator crosses above -100. The last signal was a sell 7 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 3 period(s) ago.

Rex Takasugi – TD Profile

HANG SENG INDEX closed down -360.051 at 26,613.420. Volume was 11% above average (neutral) and Bollinger Bands were 3% wider than normal.

Open High Low Close Volume___
26,922.27026,926.63126,453.28926,613.4202,109,251,328

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

Moving Averages: 10-period 50-period 200-period
Close: 27,631.21 28,071.45 29,912.55
Volatility: 18 19 22
Volume: 1,827,156,992 1,786,485,120 2,148,556,032

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 11.0% below its 200-period moving average and is in an downward trend. Volatility is high 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 bearish on .HSI and have had this outlook for the last 3 periods.

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