The Hang Seng index spiked today as traders reacted to the recent coronavirus vaccine-related news. The index is up by almost 2%, even after Oxford Economics released a disturbing economic forecast for the Hong Kong index. It is trading at $25,500, which is significantly higher than yesterday’s low of $24,779.
Other indices in Asia rose, with the Shanghai composite gaining by 0.20% and the Nikkei 225 rising by 0.73%.
Coronavirus vaccine pushes Hong Kong stocks higher
The Hang Seng index is rising mostly because of the recent news surrounding coronavirus. Yesterday, The Lancet released a report showing that a vaccine being developed by AstraZeneca and Oxford University had shown significant progress in a large test.
The scientists gave the vaccine to more than a 1,000 people and it developed important antibodies that they believe can help prevent the disease. The news came a week after another company, Moderna, said that its vaccine was making progress.
This news was important for the Hang Seng index because of the role that Hong Kong plays in finance. The city is widely known as the gateway to Asia by western firms. As such, a vaccine and drug would help welcome more foreigners to the city.
Oxford Economists Warn of Hong Kong slowdown
The Hang Seng rose even as economists at Oxford warned that the city will contract by about 6.5% this year. This is after it dropped by 2% in 2019 because of the vast protests that happened for most part of the year.
Still, the economists believe that the new Hong Kong economy will be vastly different from what it has always been before. For one, they expect that the city will shift from being a gateway to Asia to becoming a gateway to China. This is after the recently-passed security law. Also, they also see the city’s role shifting to mostly about finance.
Indeed, this year, Hong Kong has seen a lot of activities in the financial sector. For example, Ant Financial, the giant payment firm has decided to list in Hong Kong and Shanghai instead of New York.
Top movers in Hang Seng
The biggest mover in Hang Seng was HKEX, the city’s main index. It has jumped by more than 8.55% as investors reacted to news about Ant Financial.
It is followed by Sino Biopharmaceutical, Sunny Optical, Tencent, AAC Technologies, and Techtronic Industries that have risen by more than 6%. On the other hand, Bank of China, Bank of Communications, Sino Land, and ICBC are the worst performers.
Hang Seng technical outlook
Last week, the Hang Seng index dropped in all five days. It fell from a high of $26,776 and reached a low of $24,761. On the daily chart, the price is slightly above the 50% Fibonacci retracement level. It has also moved above the 50-day and 100-day exponential moving averages.
Also, it has moved back to the ascending purple trend line. Therefore, there is a likelihood that the index will continue rising as bulls aim for $27,000.
On the flip side, a move below $25,000 will invalidate this trend. This price is along the 50-day moving average and is also an important psychological level.