Hang Seng Index continues to sway under 17,000 ceiling

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23rd February 2024 – (Hong Kong) The Hong Kong stock market on Thursday continued to grapple with resistance at the 17,000-point threshold. After a steep initial drop, the Hang Seng Index clawed back, momentarily peaking at 16,895 points before retreating to close modestly lower at 16,725, a slight decrease of 17 points or 0.1%. This dip snapped a three-day winning streak for the index. Meanwhile, the China Enterprises Index edged up by 6 points or 0.12%, and the Technology Index slipped by 10 points or 0.3%. Total turnover on the main board was a robust HK$96 billion, with net purchases through the Stock Connect amounting to HK$6.445 billion.

The Year of the Dragon has seen a robust start for Hong Kong stocks, with the Hang Seng Index bolstering its position by 385 points or 2.35% for the week, marking three consecutive weeks of gains. The Technology Index has cumulatively added 57 points or 1.7%.

Major tech players experienced mixed fortunes. JD.com fell by 1.6%, Xiaomi by 1.3%, Alibaba by 0.4%, Tencent by 0.2%, and NetEase by 0.1%. In contrast, Trip.com reached an all-time high, closing up by 3%, with Meituan also rallying by 2.2%.

In the financial sector, Chinese banks and insurers saw a reversal of fortune. China Ping An ended up 1.6%, and the big four state banks enjoyed modest rises between 0.1% and 1%, while China Life Insurance remained unchanged. HSBC Holdings, following its recent earnings release, continued to give up ground, losing 0.6%; Hong Kong Exchanges and Clearing fell by 0.3%, and AIA nearly by 1%.

Consumer staples found support, with China Resources Beer and Mengniu Dairy both closing up 4.2%; sportswear brands Li Ning and Anta Sports increased by 1.9% and 1.6%, respectively, while Tingyi climbed by 1.4%.

Among other blue-chip stocks, Wharf Real Estate Investment Company suffered the most, plunging by 3.3%. Lenovo Group, which reported its earnings yesterday, had seen its stock tumble over 9%, ultimately closing down by 3.2%. Leading the pack, Longfor Group rose by 4.6%, marking the session’s best-performing blue-chip.

Analysts caution that while the market’s direction has shown improvement with the advent of the Lunar New Year, short-term movements are expected to oscillate around the 100-day moving average. Observers await clear signals of economic recovery from mainland China, noting that the current stock market rally has already factored in positive policy measures to a certain extent. The cautious influx of capital into the market reflects a wary investor sentiment. Additionally, the lacklustre performance of key stocks has dampened the market’s upward momentum, and the previously overheated ‘China special estimates’ have already racked up significant gains, now acting as a brake on the market’s upward trajectory. The Hang Seng Index is expected to consolidate at higher levels, with short-term movements predicted to fluctuate between 16,500 and 16,900 points, and the 17,000-point mark posing a substantial resistance.