Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.

The vast majority of retail client accounts lose money when trading CFDs.

You should consider whether you can afford to take the high risk of losing your money.

Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail client accounts lose money when trading CFDs.
Important Notice - Fraud awareness
Important Notice - Scam alert
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail client accounts lose money when trading CFDs. You should consider whether you can afford to take the high risk of losing your money.
Important Notice - Fraud awareness
Important Notice - Scam alert
The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider.
Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. The vast majority of retail investor accounts lose money when trading CFDs / Spread betting with this provider. You should consider whether you understand how CFDs / Spread betting work and whether you can afford to take the high risk of losing your money.
ATFX

FCA License No: 760555

ATFX-search-icon
Client Portal
Start trading
rch

Hong Kong Stocks Test an Important Support Level

Hong Kong stocks are treading familiar territory near the 18,800 level.

Weakness in global stocks and the ongoing economic slowdown in China are hurting the prospects for the HK50, but investors should watch this level.hk50 chart

4H HK50 Chart

The Hong Kong stock index registered lows in September around the 18,700 level, and that could provide upside potential if we get a buy signal. The price has been hovering with support and limited volume, but if there was an economic catalyst, then it could be the spark that starts a rally.

The market has not been immune to the US inflation report, which also dented Asian stocks as investors expect another 75-basis point rate hike from the US Federal Reserve. Markets are concerned that monetary policy is tightening too hard as inflation fears take priority over slowing growth.

On Thursday, China's central bank partially rolled over its maturing medium-term policy loans, which markets were expecting. Investors do not expect China to stray too far from the US tightening cycle.

The pause in monetary easing was also a response to downside pressure on the Yuan after the People's Bank of China (PBOC) took markets by surprise with lower rates. That led to investors dumping the currency on divergence plays.

The PBOC said it would hold rates steady on 400 billion yuan of one-year medium-term lending facility (MLF) loans to financial institutions and firms at 2.75%. That statement came as 600 billion yuan of similar loans matured on the same day, which meant a net withdrawal of 200 billion yuan from the financial system. The PBOC said they would "keep banking system liquidity reasonably ample."

The expectation in a recent Bloomberg survey was for Chinese economic growth to be 3.5% this year. That would be the second-weakest return in 40 years, but Morgan Stanley and Barclays are among analysts who see the potential for a lower figure.

That will keep pressure on the Hong Kong 50, but there is still potential for a bottom if these outlooks are priced into the market.

Last Updated: 16/09/2022

This market commentary and analysis has been prepared for ATFX by a third party for general information purposes only. Any view expressed does not constitute a personal recommendation or solicitation to buy or sell as it does not take into account your personal circumstances or objectives, and should therefore not be interpreted as financial, investment or other advice, or relied upon as such. You should therefore seek independent advice before making any investment decisions. This information has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. We aim to establish and maintain and operate effective organisational and administrative arrangements with a view to taking all reasonable steps to prevent conflicts of interest from constituting or giving rise to a material risk of damage to the interests of our clients. The market data is derived from independent sources believed to be reliable, however we make no representation or warranty of its accuracy or completeness, and accept no responsibility for any consequence of its use by recipients. Reproduction of this information, in whole or in part, is not permitted.


 

Recent news

Recent news
GBPJPY Primed for Further Losses

The GBPJPY pair dropped sharply last week after Japanese intervention and UK monetary poli...

Recent news
Hong Kong Stocks Exceed Critical Support Level

Hong Kong’s stock index faces a crucial week or two after the price was dragged through a ...

Recent news
Bank of Japan Intervenes in the Japanese Yen (¥)

The Bank of Japan sent out some threatening comments last week that signalled a potential ...

Recent news
Euro Might Be Queued Next For Currency War Gains

If the Bank of Japan has marked the start of currency wars, then the EURCHF is worth watch...

Recent news
Economic Concerns Over Global Release of National PMIs

Following the announcement of interest rate decisions by the Federal Reserve and the Bank ...