Skip to Content
News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View More
Hang Seng Index Outlook: Evergrande Uncertainty, Beijing Crackdowns Weigh on Sentiment

Hang Seng Index Outlook: Evergrande Uncertainty, Beijing Crackdowns Weigh on Sentiment

Brendan Fagan, Contributor

Hang Seng, Evergrande, US-China Trade Relations, USTR, China Crackdown – Talking Points

  • Hang Seng remains under pressure as China data is mixed, Evergrande fears grow
  • Evergrande shares halted in Hong Kong over potential acquisition rumors
  • Beijing’s crackdown on tech, casino stocks continues to weigh on sentiment
Advertisement

The Hang Seng Index remains firmly in the spotlight as the Evergrande drama continues to unfold. The index fell by more than 2% on Monday as fears continue to grow surrounding Evergrande’s dollar bond payments. Shares of the distressed developer were abruptly halted in Hong Kong along with all related structured products, “pending an announcement related to a merger or takeover.” Initial reports out of Hong Kong state that Hopson Development Holdings is looking to acquire a majority share in Evergrande Property Services Group. Worries over slowing growth in China were amplified last week, as industrial profit and manufacturing PMI data was worse than expected for August and September respectively.

China Economic Calendar

Courtesy of the DailyFX Economic Calendar

The Hang Seng Index’s decline brings key levels into play, the first being major trendline support. Despite being breached on multiple occasions in July and August, the descending trendline has offered a broad level of support. Monday’s decline sees the index testing support, and a break lower could see support in the form of the 0.236 Fibonacci level come into play around 23,500. Given the grim fundamental construct surrounding the index, price may continue to search for a near-term bottom as the Evergrande situation looks for a resolution.

Hang Seng Index Daily Chart

Chart created with TradingView

Away from Evergrande, continued scrutiny from Beijing toward gaming and tech companies continues to weigh on market sentiment. Shares of Tencent and Alibaba Group have declined for consecutive weeks, sending the Hang Seng Tech Index within touching distance of its record low. Market participants remain fearful as Beijing announced last week that it is looking into additional oversight over internet companies.

The Quiz
Discover what kind of forex trader you are
Start Quiz

Hang Seng Tech Index Daily Chart

Chart created with TradingView

US-China trade relations have also returned to the forefront, as Washington actively reevaluates the American supply chain in the wake of recent bottlenecks. In a speech given on Monday, U.S. Trade Representative stated that Washington will be enforcing “phase one” of a trade deal signed in January 2020. Tai also made China aware that tariffs were remaining in place, which may reignite tensions between Beijing and Washington. According to prepared remarks, the Biden Administration has serious concerns over “state-centered and non-market trade practices” emanating out of China.

Resources for Forex Traders

Whether you are a new or experienced trader, we have several resources available to help you; indicator for tracking trader sentiment, quarterly trading forecasts, analytical and educational webinars held daily, trading guides to help you improve trading performance, and one specifically for those who are new to forex.

--- Written by Brendan Fagan, Intern

To contact Brendan, use the comments section below or @BrendanFaganFX on Twitter

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES