The Hong Kong stock index has risen from support again and could mark a near-term low.
HK50 – Daily Chart
The recent turmoil in global stocks dragged the HK50 to the critical support level and closed higher. The index could now push higher with targets at 20,400 and 20,800.
This week, the key catalyst for the Hong Kong stock market could be the Federal Reserve meeting. The Federal Reserve had been expected to hike rates by 50bps, but the latest turmoil in US banking stocks will likely see them pause. That could bring relief to global stocks and see the HK50 move higher.
Hong Kong Stocks Market Outlook & Prediction
Hong Kong stocks can also benefit from the fallout at Credit Suisse. A rushed takeover by rival UBS wiped out $19bn of debt ahead of equity.
That led to some stress in the AT1 bonds in Europe today, and although the ECB has hit back at the move by Switzerland to alter the “pecking order” of bankruptcy. Traders might not believe that the European official will hold to their statement if a German or French bank went down.
As European and US banks stutter, Asia could see increased inflow to its stocks and banks.
