HSBC said it lowered its stance on Singapore: STI Index (.STI) stocks to “neutral” from “overweight,” and downgraded Hong Kong equities from “neutral” to “underweight”

HSBC said it lowered its stance on Singapore: STI Index (.STI) stocks to “neutral” from “overweight,” and downgraded Hong Kong equities from “neutral” to “underweight”

HSBC said it lowered its stance on Singapore: STI Index (.STI) stocks to “neutral” from “overweight,” and downgraded Hong Kong equities from “neutral” to “underweight”

HSBC said it downgraded stocks in Singapore and Hong Kong as the two major financial centers in Asia face the risk of slower economic growth this year.

The largest bank in Europe lowered its stance on Singapore stocks to “neutral” from “overweight,” and downgraded Hong Kong equities from “neutral” to “underweight,” it said in a report dated March 26, which outlined the bank’s Asian equity strategy for the second-quarter.

The two economies are key bases for global banks and major businesses seeking opportunities in Asia.

Stock markets in Singapore and Hong Kong have been rising this year after suffering losses in 2018. The Straits Times Index has moved 4.22 percent higher so far this year, while the Hang Seng Index jumped 11.15 percent in the same period.

But the small and open nature of both economies mean the two countries are highly exposed to swings in the global environment, HSBC said.

In Singapore, sectors that focus on the domestic market have failed to lift the economy, the bank said, adding it would in turn limit how much companies can grow. That’s despite the stock exchange offering attractive valuations and the third highest yield in Asia at around 4.8 percent, added HSBC.

“Growth is unexciting,” the bank’s analysts wrote. “Overall, we find other markets offer a more attractive proposition than Singapore, so we move our stance to neutral.”

The analysts were more bearish on Hong Kong. They said business conditions in the Chinese special administrative region are weighed down by “weak demand from China, slowing global growth and uncertainty around a tariff war” in the near term.

“Against this backdrop, firms continue to cut back on their purchasing and hiring activities,” HSBC said.

Overall, the bias in prices is: Sideways.

The projected upper bound is: 3,253.51.

The projected lower bound is: 3,156.11.

The projected closing price is: 3,204.81.

Candlesticks

A white body occurred (because prices closed higher 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 26 white candles and 24 black candles for a net of 2 white candles.

Three white candles occurred in the last three days. Although these candles were not big enough to create three white soldiers, the steady upward pattern is bullish.

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 62.0478. This is not an overbought or oversold reading. The last signal was a buy 18 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 48.29. 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 102 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 3. This is not a topping or bottoming area. The last signal was a buy 2 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 21 period(s) ago.

Rex Takasugi – TD Profile

STRAITS TIMES closed up 6.570 at 3,204.960. Volume was 51% below average (consolidating) and Bollinger Bands were 58% narrower than normal.

Open High Low Close Volume___
3,196.8303,213.6203,192.4803,204.960 97,918,704

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

Moving Averages: 10-period 50-period 200-period
Close: 3,205.40 3,217.43 3,179.31
Volatility: 8 10 15
Volume: 199,243,200 206,319,280 219,149,344

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

STRAITS TIMES is currently 0.8% above its 200-period moving average and is in an downward trend. Volatility is low as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of .STI at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bearish on .STI and have had this outlook for the last 19 periods.

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