The Hang Seng index is among the best-performing indices in Asia today. Up by more than 1.70%, the third-biggest index in Asia, has outperformed the Nikkei 225 and Shanghai Composite, which have gained by 0.12% and 1.60% respectively. The Hang Seng is trading at $24,835 and only six companies are in the red.
Vaccine hopes outweigh security risks
The Hang Seng index is rising because traders are optimistic that a coronavirus vaccine will help the world economy emerge from the pandemic. In a report yesterday, a report said that a vaccine being developed by Pfizer and BioNTech had showed positive results in its initial tests. The vaccine has been called medRXiv.
The paper said that the vaccine had showed positive signs but it also caused side effects like high fever if taken in high doses. According to Statnews, the study involved randomly assigned 45 patients who got one of the three doses. 12 of them were given a 10-microgram does, 12 a 30-microgram dose, and 12 a 100-microgram dose. The remainder were given a placebo. The group given a 100-microgram dose had some side effects.
Still, there are signs that the vaccine, together with other drugs will help to deal with the disease. If this happens, it would be a positive thing for the Hang Seng and other global indices.
However, investors are still concerned about the national security law that went into effect this week. Yesterday, Hong Kong police officers arrested more than 100 people in relation to the laws. These people now face up to a lifetime in a Hong Kong or Chinese jail. Today, thousands of people in Hong Kong continued to protest.
Meanwhile, the United States has revoked the special trading relationship with the city. This means that the country could start adding more tariffs to goods from the city. It also means that tensions between the US and China will continue to increase.
Hang Seng top movers
Most companies in the Hang Seng are in the green today. The best-performer is China Life Insurance, whose shares are up by more than 8.46%. It is followed by China Resources Land, whose shares have risen by more than 5.67%. Other top movers are China Overseas, Country Garden Holdings, Sino Land, and Hang Lung ppt. On the other hand, the only Hang Seng companies in the red are CSPC Pharma, Techtronic Industries, Hengan International, and Shenzhou International.
Hang Seng index technical analysis
The Hang Seng index is trading at $24,815. On the daily chart, the price is slightly above the 50-day exponential moving averages and is along the 100-day EMA. The price is also slightly above the 38.2% Fibonacci retracement level. The gains made today are the first four days. Also, the index is above the ascending trendline that joins the lowest levels in May and June. Therefore, I expect the price to continue rising as bulls attempt to move above the previous high of $25,275.
On the flip side, a move below $24,133 will invalidate this thesis. This price is at the intersection of the ascending trendline and the lowest point on June 29.