Hang Seng crawls back as fears of Hong Kong property bubble rise
Hong Kong shares crawled back today as investors reacted to China’s reassurance on Hong Kong. The blue-chip Hang Seng index is up by more than 2 per cent after having the worst two days since 2015. All companies in the index were in the green today.
Hong Kong stocks climb amid property bubble
I had written about the Hong Kong property bubble a few weeks ago. At the time, analysts were questioning whether the commercial real estate sector would boom again as risks rose. Of course, the halt of travel and the protests reduced the number of people going to Hong Kong hotels and shopping malls.
Turns out, investors have started to question the sector now. Today, Bloomberg and the Financial Times have written stories talking about the sector. According to the FT, commercial property sales dropped to zero in the first quarter.
Indeed, shares of the top commercial property companies in Hong Kong like New World Development, Henderson Land, CK Asset, Sun Hung Kai, Swire Pacific, and HongKong land Holdings have been among the worst-performing in the Hang Seng index. Indeed, real estate stocks in the MSCI Hong Kong index declined by 8.4 per cent on Friday, when new risks started to emerge.
The risks for the real estate sector in Hong Kong is immense. That is because it employs about 7 per cent of the entire population.
Best and worst performing Hang Seng stocks
All companies in the Hang Seng were in the green today. The best-performing were Henderson Land, Sands China, Galaxy Entertainment, and CK Infrastructure. All these rose by more than 4%. On the other hand, the worst-performing stocks were HKEX, China Shenhua Energy, Hengan International, and AAC Technologies. Which dropped by less than 1 per cent.
The Hang Seng index is trading at $23,438, which is above the Friday’s low of $22,542. The price is still below the ascending pink trendline that I pointed to on Friday. The price is also below the 50-day and 100-day exponential moving average. Therefore, there is a possibility that bulls will attempt to test the Friday’s open at $23,747.
On the flip side, a move below the Friday’s low of $22,500 will invalidate this trend. That movement will mean that there are still sellers in the market, who will be keen to push the index to below $22,000.