Hong Kong stocks pared yesterday’s gains as investors continued to watch the proceedings in parliament. At the same time, mainland investors are snapping cheap stocks in the Hang Seng at an unprecedented pace, according to Bloomberg. The index is trading at $23,183, down by about 0.90%.
Hong Kong national anthem bill irks residents
Protesters gathered in parliament buildings today as “members of parliament’ debated a controversial national anthem bill. The bill, which has been proposed by the members loyal to mainland China, will make it illegal for one to disrespect the Chinese national anthem. It would also force the anthem to be taught in schools and be sung in organisations. The bill has also received the backing of Li Ka Shing, one of the wealthiest people in Hong Kong.
The bill comes at an important time for Hong Kong. Just last Friday, Beijing announced that it would bypass the Legco and impose its legal system in the country. Communist party and Hong Kong leaders said that the bill is necessary to bring law and order to Hong Kong. Opponents say that it will victimize the autonomous region and hinder genuine protests.
Chinese buy cheap Hong Kong stocks
Meanwhile, according to Bloomberg, many people from China are scooping cheap companies in the Hang Seng. The report said that eligible investors have bought stocks worth more than $35.3 billion, which is the most since 2017. In the past, Chinese investors have moved to acquire Hang Seng stocks in the time of crisis. As a result of this buying Chinese residents now own about 3 per cent of shares listed in Hong Kong. Also, Bloomberg said that it was unclear whether state funded enterprises in China had bought the shares.
Hang Seng best and worst-performers
Most stocks in the Hang Seng were in the red today. The worst-performing stock was CK Infrastructure, whose shares fell by more than 4%. It was followed by Hengan Group, Power Assets, China Mengniu Dairy, and Tencent Holdings, whose shares fell by more than 2 per cent.
The best-performing stocks in the index were CSPC Pharma, Sands China, China Unicom Holdings, and Hang Lung among others.
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Hang Seng index technical outlook
On the daily chart, we see that the Hang Seng index attempted to recover after bottoming at $22,533 on Friday. The index rose yesterday and found important resistance at $23,500, a level I had talked about on Monday.
At the same time, the price is below the 100-day and 50-day exponential moving averages. Therefore, a move below the 23.6% Fibonacci retracement at $23,086 will signal that bears are still present. This will see it continue moving lower.
On the flip side, a move above Friday’s open at $23,766 will invalidate this trend because it will mean that there are still buyers, who will be keen on pushing it higher.
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