Hong Kong stocks were lower due to capital flight after an intervention by the Hong Kong Monetary Authority.
The HKMA intervened for the first time this year, leading to some profit-taking in the index from investors.
HK50 – Daily Chart
HK50 has now retreated from the 22,523 resistance level, which could see a further pullback on a technical basis. A break above that level would open up the potential for a sustained move toward 30,000.
Hong Kong stocks closed at the lowest level in more than five weeks amid concerns about capital flight from the city’s financial markets while traders await the latest US inflation report that may sway the Federal Reserve’s policy tightening bias.
The Hang Seng Index dropped by 0.2%, which marked the lowest close since January 6. The Hang Seng Tech Index was also lower, falling 1%, and the Shanghai Composite Index rose 0.3%.
The Hong Kong Monetary Authority purchased HK$4.22 billion (US$538 million) in overnight trading. It sold the equivalent number of US dollars to protect its currency peg. The local dollar weakened over the last few weeks as local banks failed to follow the Federal Reserve’s latest 25-basis point tightening move.
Property stocks have been popular this year, with Guangdong Investment up 10%. The Hang Seng Property index is up about 3.1%, but investors have been keen on Hong Kong real estate investment trusts (REITs). The drop in the overall market has meant that stock prices are now lower than the value of the properties owned in the trusts.
Hong Kong home prices dropped 15.6% in 2022, which was the end of a 13-year uptrend after covid lockdowns saw investment flows decrease from Chinese investors and tourists.
