The Hang Seng index declined by more than 30 basis points becoming the only laggard in Asia. Other indices, including the Shanghai, Nikkei 225, and KOSPI advanced as investors reacted to the upbeat jobs data from the United States.
Most companies in Hang Seng lag
Most companies in the Hang Seng index declined, with Hengan International Group, CSPC Pharma, Want Want China, and WH Group having the biggest declines. Hengan shares dropped by more than 4%. Other key laggards were Galaxy Entertainment, China Construction, Tencent, and Citic Pacific.
On the other hand, the top performers were CNOOC, Hang Seng Seng Bank, China Life Insurance, Henderson Land, and SHK Ppt, among others. These shares rose by more than 2%. Most of these companies are excited because the city seems to be reopening. Some of the key spots, including Disneyland and Ocean Park are starting to reopen.
Why Hong Kong tycoons support the security law
The Hang Seng index lagged even as reasons emerged why most Hong Kong tycoons support the controversial security law. According to the South China Morning Post, the tycoons behind companies like Swire Pacific, Galaxy Entertainment, and Jardine Matheson are trying to protect their fortunes that are worth more than $140 billion.
In a statement last week, a developer group that backs some of the biggest developers in the city said that the law will guarantee stability and stability.
But an analysis by The Economist showed that the law could put the city’s attractiveness at risk. They argued that the law will make the city unattractive to foreign companies, who have always valued Hong Kong’s autonomy.
The Hang Seng index is also partly reacting to the weak trade numbers from China. The data showed that imports and exports declined in May, after making some progress in April.
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Hang Seng technical outlook
The Hang Seng index is trading at $24,800, which is slightly below the day’s high of $25,000. On the daily chart, the RSI has been on an upward trend, and is now approaching 60. The price is also along the 100-day exponential moving average and slightly above the 50-day EMA. The price may resume the upward trend as the bulls attempt to test the 50% retracement level at $25,168.
On the flip side, a move below $24,222 will invalidate this prediction. This price is at the intersection of the 38.2% Fibonacci retracement level and the 50-day exponential moving average.
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