The Hang Seng index was barely moved today as the market shifted focus to the annual Chinese parliamentary meeting. The blue-chip Hong Kong stocks index was up by about 30 basis points at about 6:45AM (GMT), with most stocks being in the red. At the same time, the index is reacting to the deteriorating relationship between China and the US
Hong Kong stocks await China meeting
More than 3,000 elite will meet for the annual parliamentary session in Beijing that will start today. The meeting comes at a time when the Chinese economy has seen its biggest challenge. Data released this month showed that the economy contracted for the first time in decades. The elite will deliberate on this contraction and how to improve.
The Hang Seng and other Chinese indices were little moved ahead of the gathering.
The jamboree will also focus on the deteriorating relationship between China and the United States. The US has accused China of being too slow in its response of the coronavirus pandemic. As a result, Donald Trump has talked about tariffs. China has rejected this characterization and some of XI Jinping advisors have asked him to do away with the trade deal he signed in January.
Meanwhile, according to the South China Morning Post, the diplomatic backchannels have been drying, making it possible that tariffs will come back.
The Hang Seng index will react to how the members react to this.
Another thing that will move the Hang Seng is the talk of defense. Many Chinese officials have called for the country to increase its spending on defense at a time when tensions are rising. Also, the members will likely talk about Hong Kong and the recent instability.
Biggest movers Hong Kong stocks
The Hang Seng, which is one of the best-performing indices in the world this year, saw most of its constituent stocks in the red today. The worst-performing stock was Shenzhou International, which declined by more than 4%. It was followed by AAC Technologies, Hengan, Sino Biopharmaceuticals, and CK Hutchison, which declined by more than 1.5%.
There were only ten stocks in the green in the Hang Seng index today. HKEX was the best-performing, raising by more than 2.63%. It was followed by China Mobile, Petrochina, and HSBC, which rose by more than 0.73%.
The Hang Seng index is trading at $24,335, making it the third straight day of declines. On the daily chart, the price is below the ascending pink trendline and is along the 38.2% Fibonacci Retracement level. The price is stuck at the 50-day exponential moving average and is slightly below the 100-day EMA. This price action says that there is an indecision between bulls and bears. Therefore, I expect a strong move above the previous resistance level of $24,838 to validate the bulls.
On the other hand, a move below $23,500 will usher a new downward trend. This price is at the intersection of the ascending trendline and the previous support.