Stocks in Hong Kong: HANG SENG INDEX (.HSI) and mainland China advance on expectations of additional stimulus out of Beijing and eventual success in defeating the novel coronavirus
Stocks in Hong Kong and mainland China advanced Friday on expectations of additional stimulus out of Beijing and eventual success in defeating the novel coronavirus.
The Hang Seng Index rose 0.3 per cent to 27,815.6. That left Hong Kong’s benchmark with a 1.4 per cent weekly gain.
On the mainland, the Shanghai Composite Index rose 0.4 per cent to 2,917, also leaving it with a weekly 1.4 per cent gain.
The Shenzhen Component Index climbed 0.5 per cent to 10,916.31, while the CSI 300 gauge of large caps traded in Shanghai and Shenzhen increased by 0.7 per cent to 3987.73.
“Sentiment is still driven by excessive liquidity and lower funding costs in mainland China,” said Alan Li, portfolio manager at Atta Capital. “People expect the positive impact from reducing interest and bank reserve rate rather than the threat from virus.”
China’s central bank has injected 1.7 trillion yuan liquidity into its banking system and issued various policies to increase loans, especially for small and medium-sized enterprises hit hard by the coronavirus.
Government advisers are circulating ideas in Beijing to further cut interest rates and allow the fiscal deficit ratio to exceed the 3 per cent level.
“The market is losing steam today,” said Linus Yip, chief strategist at First Shanghai Securities.
The real impact of the novel coronavirus on the whole China economy and performance of listed companies has not been reflected yet.
On the Hang Seng Index, property stocks gained, with Wharf Real Estate Investment Company rising 2.5 per cent and Country Garden advancing 2.4 per cent.
Guangzhou Automobile Group shed 2.2 per cent and Geely Auto was down 0.6 per cent, after both companies reported double-digit percentage slumps in sales in January.
HSBC Holdings ticked up 0.4 per cent ahead of its 2019 full year results to be released next Tuesday, shrugging off news that one HSBC employee is in Hong Kong government quarantine after close contact with virus-infected relatives.
On the mainland, the diversified financial sector and securities brokerages led gains.
Financial firms in Anhui province were boosted by 2 billion yuan of special funds released into the eastern region in China.
Anhui Xinli Finance shot up 10 per cent – the daily limit – to 6.27 yuan. Guoyuan Securities closed 9.3 per cent higher to 8.81 yuan.
Meanwhile, stocks related to blood testing soared as plasma from recovered patients could be used in fighting the coronavirus. A gauge tracking 10 blood products companies by data provider Xuangubao rose 7.1 per cent. Shanghai RAAS Blood Products increased by 7.8 per cent to 10.18 yuan. Hualan Biological Engineering rose 3.8 per cent to 42.99 yuan.
Luxshare Precision Industry closed 0.6 per cent higher at 44.36 yuan, while Kweichow Moutai slipped 0.3 per cent to 1,088 yuan.
Overall, the bias in prices is: Upwards.
The projected upper bound is: 28,775.85.
The projected lower bound is: 26,914.12.
The projected closing price is: 27,844.98.
A white body occurred (because prices closed higher than they opened).
During the past 10 bars, there have been 8 white candles and 2 black candles for a net of 6 white candles. During the past 50 bars, there have been 27 white candles and 23 black candles for a net of 4 white candles.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 83.7200. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 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 53.20. 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 28 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 92. This is not a topping or bottoming area. The last signal was a buy 8 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 3 period(s) ago.
Rex Takasugi – TD Profile
HANG SENG INDEX closed up 85.600 at 27,815.600. Volume was 8% below average (neutral) and Bollinger Bands were 56% wider than normal.
Open High Low Close Volume___
Short Term: Overbought
Intermediate Term: Bearish
Long Term: Bullish
Moving Averages: 10-period 50-period 200-period
Close: 27,291.21 27,649.70 27,325.98
Volatility: 17 21 20
Volume: 1,947,425,024 1,611,272,192 1,663,401,088
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.
HANG SENG INDEX is currently 1.8% above 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 12 periods.
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