Hang Seng nosedives as questions on future of Hong Kong remain

The Hang Seng index was among the worst-performing indices in Asia today. The index is down by more than 1.30% and is trading at $24,180. On the other hand, the Nikkei 225 is down by less than 1% while the Shanghai composite is down by just 0.20%. The index is falling as investors start to question whether Hong Kong is doomed.

Is Hong Kong doomed?

A key question everyone who follows Hong Kong is asking is whether the city is doomed or whether it can bounce back from last year’s protests, this year’s coronavirus, and now, the national security law. In recent months, the verdict among some key entities is that Hong Kong better days are behind it.

For example, Kyle Bass, the veteran investor who predicted the housing crisis, has placed millions of dollars at risk by betting against the Hong Kong dollar.

Also, as I reported yesterday, some companies like Expedia, Riot Games, and Goldman Sachs appear to be betting against the city. These firms and many others have moved their offices from the city to other Asian places like Singapore.

Now, ordinary Hong Kongers appear to be betting against their city. According to South China Morning Post, many residents have started swapping their Hong Kong dollars for US dollars. At the same time, emigration consultants have reported that many residents have started planning their departure from the city.

On the other hand, some wealthy tycoons with billions at stake have continued to believe that the city will bounce back. Part of the reason for the optimism is that many people from mainland China have been moving to the city. So, what does all this mean for Hang Seng? It’s hard to know but there are reasons to be optimistic. For example, not all Hong Kongers will dump their city. Also, the security law could ensure peace and prosperity and attract more investment.

Hang Seng top movers

Most companies in the Hang Seng were in the red today. Among the worst performers were CNOOC, Hang Seng Bank, Shenzhou, PetroChina, and China Petrol and Chemicals. Real estate developers like CK Hutchison, Swire Pacific, and Henderson Land were also in the red. On the other hand, there were four companies in the green, including Hang Lung, Galaxy Entertainment, Techntronic, and Wharf Real Estate.

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Hang Seng technical analysis

After dropping sharply, the Hang Seng index pared some of those losses and is now trading at $24,156. On the daily chart, the price is along the 38.2% Fibonacci retracement and is along the 50-day exponential moving averages. The price is also below the 100-day EMA. This means that as we move into the weekend, the outlook of the Hang Seng index is neutral.

A Monday open below today’s low of $23,893 will see the index continue moving lower. A open above the 38.2% retracement will see it continue to soar.

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