Hang Seng Index Outlook as Xiaomi Stock Price Surges

The Hang Seng index made a bullish breakout on Monday morning as mood among investors improved. The blue-chip Hong Kong index rose to H$22,362, which was the highest point since April this year. It has risen by 22% from its lowest level in March, meaning that it has outperformed other global indices like the S&P 500 and Dow Jones.

Xiaomi stock price boosts HSI

The Hang Seng soared by more than 3% on Monday morning helped by Xiaomi, the giant smartphone company. The company’s stock price soared by more than 12% as investors bought the company’s dip. 

Still, Xiami remains deeply in the red this year after the company recorded its first revenue decline because of the recent lockdowns. It has even lost its market share to leading smartphone companies like Apple and Samsung. Xiaomi had a loss of 578 million yuan last quarter after making a 7.8 billion yuan profit a year earlier.

ANTA Sports Products was the second top performer in the index as its share price rose by more than 10%. Other top performers were technology companies like Alibaba Health Information, Alibaba, Netease, and Tencent Holdings. On the other hand, the worst-performing stocks in the Hang Seng were Xinyi Solar, CSPC Pharma. Hang Seng Bank, and Orient Overseas.

There is a likelihood that the HSI index has formed a bottom. Besides,  investors have priced in most negative challenges like thinning margins, higher interest rates, and a slowdown in China. The fear and greed index has also moved from the extreme fear zone.

Hang Seng index forecast

In my last update on Hang Seng, I noted that the index would keep rising in the coming days. This view was correct as it moved above the important resistance at H$21,300, which was the highest point on May 4th. It has now moved above the final hurdle at H$22,152, the highest point on June 9th.

It has moved above the 25-day and 50-day moving averages and broken above the ascending triangle pattern. Therefore, the outlook for the Hang Seng index is bullish, with the next level to watch being at H$23,000. A drop below the support at H$22,152 will invalidate the bearish view.

Hang Seng

HSI support and resistance levels

My bullish outlook on the Hang Seng is in line with what InvestingCube’s Support and Resistance is showing. The index has managed to move past the tool’s first and second profit levels. Subscribe to the S&R indicator for more of these signals. 

HSI