The Hang Seng index crashed by more than 4% on Tuesday, continuing the sell-off that started a few weeks ago. The index has diverged from other leading indices like the Dow Jones, Nasdaq 100 and S&P 500 that have surged to a record high. It has even erased the year-to-date gains. Other Asian indices like the Nikkei 225 and Shanghai Composite also crashed.
Top movers in the Hang Seng
The Hang Seng index has slumped sharply as investors react to the ongoing tech and education companies crackdown by China. In a statement on Monday, the country’s regulator announced a raft of new measures targeting the education and tech sectors.
For example, the new regulations barned education companies from offering foreign curriculum, receiving investments from abroad, and to avoid making profits. As a result, shares of top education companies like New Oriental and TAL Education crashed by more than 20% on Monday.
The government has also cracked down on tech companies. In the latest measures, it barred companies from preventing companies from access to data. In this case, companies like Alibaba will start providing access to competitors like JD and Tencent.
Today, technology companies are among the worst performers in the Hang Seng index. Alibaba Health Information shares crashed by more than 20% while Meituan, Tencent, Alibaba, and Xiaomi crashed by more than 5%. In addition to these, other worst performing shares in the index are Haidilao International, Country Garden, WuXi Biologics, ANTA Sports, and HKEX.
On the other hand, the top performers in the Hang Seng are traditional companies like HSBC, Citic Pacific, Chian Construction, CK Asset, and CLP Holdings.
Hang Seng index technical analysis
The daily chart shows that the Hang Seng index has crashed by more than 5% today. It has fallen in the past three straight days and is now at the lowest level since October last year. The index has also moved below all moving averages and the important support at $27,489.
Therefore, the HSI index will likely keep falling unless China intervenes. The decline will likely continue, with the next reference point being the September low at $23,135. Still, there is also a possibility that the index will stage a relief rally soon.’