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Hang Seng Index Eyes 7% Drops After Losing Key Level

Hang Seng Index (INDEXHANGSENG: HSI) has broken below the 18,275 points support level and is trading 1.22% below it. The index opened higher on Thursday, but as the day progressed, the candle turned red. However, the candle still closed 38 points above its previous low. The Index closed at 18047 points after gaining 0.21%.

The HSI index is normally used as a benchmark index to judge the overall market sentiment in the Hong Kong Stock Exchange. The index rose by an incredible 17% at the start of 2023 and made a yearly high of 22,688 points in January. The index has been in a downtrend ever since as bearish sentiment took over Chinese equities.

Industrial Growth Slows Down In Hong Kong

The Hong Kong Census and Statistics Department reported a 2.6% yearly growth rate in industrial production for Q2, lower than the 3.8% in Q1. A 0.2% YoY reduction in producer prices was also reported due to a decrease in prices of metal, electronics, and machinery equipment.

In other news, Moody has rated the Chinese real estate sector from stable to negative, which may lead to further chaos in equities. However, investors are also hopeful as August is a peak holiday month in China. They expect a significant increase in retail sales, investment, and output for August. The Hang Seng Index sits 20.5% below its yearly high.

Hang Seng Index Forecast

As I predicted in my previous analysis for INDEXHANGSENG: HSI, the index retested the 18,900 points level and saw a 4.4% correction right after. The index has now broken below the 18,275 points support level. It also currently sits 8.1% below its 200 MA level, which is a bearish indicator.

The Hang Seng Index forecast has flipped bearish after a recent breakdown below the 18,275 points level. Bears may now target 18320, which is the next major support level. To avoid this bearish outlook, bulls need to gain strength above the 18275 points level.

In the meantime, you are also welcome to follow me on Twitter to keep track of my personal trades and the latest analysis on the Hang Seng index.

Hang Seng index chart