Hang Seng Index (INDEXHANGSENG: HSI) has got a strong rebound from its May 2023 lows. The benchmark index of the Hong Kong stock market dropped to its yearly lows, hitting its lowest level since November 30, 2022. Our analysis reveals that the index is retesting a critical level on its chart, which must be reclaimed.
On Friday, the Hang Seng index had the biggest winning day in three months. The index was up 733 points till press time after rising 4.02%. The slump in the Chinese stock market appears to have acted as a headwind for Hong Kong markets.
Why Is Hang Seng Index Rebounding?
The Hong Kong stock market faced a strong bounce at the end of this week. The reason behind the strong comeback in Hang Send Index appears to be fuelled by the U.S. Senate passing legislation that would avert a debt default.
The latest data shows that the Hong Kong economy has significantly recovered since the ease of travel restrictions. There has been a significant increase in the inbound tourism in the country. Consequently, the country’s GDP has risen by 2.7% in the first quarter of 2023. However, the benchmark index HSI had to face the headwinds from the Chinese economic data which indicated a slow recovery in the 2nd largest economy.
Hang Seng Index Needs To Reclaim 19,000 Level
In my last INDEXHANGSENG: HSI forecast, I predicted a drop to the 18,100 level. My forecast was initially laughed upon by many analysts. However, just a few weeks later, the prediction was perfectly met as the index hit its lowest level in 6 months.
My Hang Seng Index forecast will remain bearish as long as the index keeps trading below the $19,000 level. A reclaim of this level can trigger a much bigger rally. There is a high likelihood of rejection from the 19,000 in the coming days.
I’ll keep posting my updated analysis on Hang Seng Index in my free Telegram group, which you’re welcome to join.
