Hang Seng darts higher as Cathay Pacific leads; CK Hutchison lags

The Hang Seng index soared for the second straight day as the market reacted to the improving macroeconomic situation. The index also rose a day after it received a major revamp that will see companies like Alibaba and Xiaomi be included.

Hang Seng best and worst-performers

Only three companies in the Hang Seng declined today. The worst-performing was CK Hutchison, whose shares dropped by more than 1.90%. CK is one of the largest companies in Hong Kong with holdings spanning retail, ports, infrastructure, energy, finance, and telecommunications. It was followed by WH Group, whose shares dropped by more than 1.30%. The other laggards were Sino Land and China Mobile.

The best-performing companies in the Hang Seng was Swire Pacific, the owner of Cathay Pacific, the giant airline. The company’s shares rose by more than 4.4% as the reopening increased chances of more traveling. It was followed by Shenzhou International, Sunny Optical, China Shenhua, and China Life Insurance.

Alibaba and Xiaomi set to join Hang Seng

The biggest story in Hong Kong has been the new revamp of the Hang Seng index. The index will now start including companies with a dual share structure of ownership. This move will allow companies like Alibaba and Xiaomi to join the blue-chip index. Still, this dual ownership will go into effect in August this year and secondary listings will be subject to 5% weighting cap.

Many investors were waiting for the cap to be about 10%. In the past, Hang Seng authorities were opposed to dual class shares because they were unequal to other investors.

Another big news in Hong Kong is about the trade war between China and the US. The city will be in spotlight ahead of China’s political elite meet for their parliamentary sessions.

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Hang Seng technical outlook

The Hang Seng index is trading at $24,370, which is inches above the 50-day exponential moving average and the 38.2% retracement level. Also, the index is slightly below the upper side of the Ichimoku cloud. Therefore, it appears that bulls are in total control, but they will need to defend the important resistance level at $24,838 for the bullish breakout to be confirmed.

On the flip side, a move below $23,500 will invalidate this trend of the Hang Seng. This price is along the lowest swing on April 22 and is also an important psychological support level.

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