HK/China Equities Search for Upward Momentum: Hang Seng, CSI 300 Setups

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The Hang Seng Index’s rebound early last week ran out of steam toward the end of the week, suggesting that a meaningful upward momentum is lacking in Hong Kong/China equities despite the support/stimulus measures in recent months.

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Chinese policymakers have responded with a string of support/stimulus measures in recent months in an attempt to revive the faltering post-recovery and a weak property sector. Most recently, media reports suggest China is considering creating a state-backed stabilization fund to shore up confidence in equity markets. Moreover, the world’s second-largest economy is considering raising its budget deficit for 2023 as the government prepares a fresh round of stimulus to boost the economy.

For the immediate downward pressure to fade, the index needs to break above 4000-4270, including the February high of 4270, the cloud, and the moving average, the bias remains weak. Any break below strong support on a horizontal trendline since 2019 could clear the path toward the 2019 low of 2935.

 

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