Hang Seng: Hong Kong stocks unhinged sell-off continues as protests rise

The Hang Seng was the worst-performing major index in Asia-Pacific today. The index declined by almost one per cent while the Shanghai composite declined by 0.17%. The Nikkei 225, ASX, and KOSPI rose by 1.50%, 1.80%, and 0.82% respectively.

Hang Seng best and worst-performers

Most stocks in the Hang Seng declined today. The worst-performer was Hang Seng bank whose shares declined by more than 4%. It was followed by Link Real Estate, China Mobile, Swire Pacific, and Wharf Real Estate.

The best-performing stocks in the Hang Seng were HKEX, China Resources Land, Galaxy Entertainment, and China Shenhua Energy, whose shares rose by more than 2%.

Hang Seng falls as protests restart

Hong Kong residents were unconcerned about coronavirus as they went back to the streets yesterday. About 180 people were arrested for illegal assembly and misconduct in public spaces. Tens were hospitalized as the police responded to the protests.

These protests were expected after China’s parliament moved to bypass Hong Kong parliament and impose its security laws in the autonomous city. While the new law was supported by Hong Kong’s Carrie Lam, it irked many residents.

The new security laws mean that China will now move swiftly and bring its security forces in the city. These forces can arrest and deal with protesters.

Hong Kong protests impact on the economy

Uncontrolled protests are not ideal for any economy. Just a year ago, Hong Kong went into a recession because of the protests that happened for months.

This weakness happened as many travelers cancelled their trips to the city and many shops closed. In addition, the hotel industry, which employ thousands of people witnessed less traffic and Cathay Pacific reported millions of dollars in losses.

The current protests will come at a time when the city is still battling the coronavirus pandemic which has caused many hotels and retailers to close their businesses. There is also talk that the real estate bubble will burst this year.

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Hang Seng technical outlook

As I wrote on Friday, the Hang Seng index moved below the ascending pink trendline and the 50-day and 100-day exponential moving averages. The index also moved below the 23.6% Fibonacci retracement level and is now trading at the lowest level since April 1. Therefore, it seems that bears are now in control, which means that the downward trend will continue as bears attempt to move below the psychological level of $22,000.

On the flip side, a move above the 50% retracement of $24,246 will invalidate this trend. This price is also above the 50-day and 100-day EMAs.

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