The Hang Seng index rose slightly on Tuesday as Hong Kong’s Chief Executive pledged to accelerate the reopening process. The index rose by more than 1.3% and was trading at H$18,812, which was slightly above Monday’s low of HS18,473. It has fallen by more than 40% from the highest level in 2021 and is hovering near the lowest level since February 2016.
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Hong Kong reopening
The Hang Seng index bounced back slightly as investors reacted to the upcoming statement by John Lee Ka-chiu. In a statement, the city’s chief executive said that he was committed to create maximum room for the city to reconnect with the world.
According to the SCMP, the cabinet has decided to lift hotel quarantine and replace it with a seven-day home medical surveillance. He said that he was conscious of the need to maintain Hong Kong’s competitiveness by ensuring good connectivity. He nonetheless stopped short of lifting all quarantine measures.
Hong Kong has been one of the most isolated cities in the world as it has maintained its strict quarantine measures. Therefore, reopening these measures will likely lead to more activity. Still, other Asian cities like Singapore have become favorites for businesses looking for exposure to China.
Most Hang Seng constituents were in the green on Tuesday as focus now shifts to the upcoming interest rate decision by the Fed. Sands China was the best-performing company in the index as its stock jumped by 6.60%. NetEase, Alibaba, Galaxy Entertainment, JD, and Techtronic Industries shares rose by more than 3.8%.
On the other hand, the worst performers in the Hang Seng were Haidilao, Country Garden Holdings, China Merchants Bank, and China Mobile.
Hang Seng index forecast
The daily chart shows that the HSI index has been in a strong bearish trend in the past few months. A closer look shows that the index has formed a descending channel that is shown in black. It has also moved below the 25-day and 50-day moving averages and the important support level at $19,185, which was the lowest level on May 10.
Therefore, the index will likely continue falling as sellers target the next key support level at $18,000. A move above the resistance point at $19,000 will invalidate the bearish view.