Alert

LEARN HOW TO SET UP AND MANAGE A PORTFOLIO IN 4 EASY STEPS WITH DR. JIM SCHULTZ!

Beijing Financial District, China

Hang Seng Index Outlook: Evergrande Uncertainty, Beijing Crackdowns Weigh on Sentiment

Oct 5, 2021

By: Brendan Fagan

HANG SENG, EVERGRANDE, US-CHINA TRADE RELATIONS, USTR, CHINA CRACKDOWN – TALKING POINTS:

  • Hang Seng remains under pressure as China data is mixed, Evergrande fears grow
  • Evergrande shares halted in Hong Kong over potential acquisition rumors
  • Beijing’s crackdown on tech, casino stocks continues to weigh on sentiment

The Hang Seng Index remains firmly in the spotlight as the Evergrande drama continues to unfold. The index fell by more than 2% on Monday as fears continue to grow surrounding Evergrande’s dollar bond payments. Shares of the distressed developer were abruptly halted in Hong Kong along with all related structured products, “pending an announcement related to a merger or takeover.” Initial reports out of Hong Kong state that Hopson Development Holdings is looking to acquire a majority share in Evergrande Property Services Group. Worries over slowing growth in China were amplified last week, as industrial profit and manufacturing PMI data was worse than expected for August and September respectively.

CHINA ECONOMIC CALENDAR

1005_dfx1.png


Courtesy of the DailyFX Economic Calendar

The Hang Seng Index’s decline brings key levels into play, the first being major trendline support. Despite being breached on multiple occasions in July and August, the descending trendline has offered a broad level of support. Monday’s decline sees the index testing support, and a break lower could see support in the form of the 0.236 Fibonacci level come into play around 23,500. Given the grim fundamental construct surrounding the index, price may continue to search for a near-term bottom as the Evergrande situation looks for a resolution.


HANG SENG INDEX DAILY CHART

1005_dfx2.png


Chart created with TradingView

Away from Evergrande, continued scrutiny from Beijing toward gaming and tech companies continues to weigh on market sentiment. Shares of Tencent and Alibaba Group have declined for consecutive weeks, sending the Hang Seng Tech Index within touching distance of its record low. Market participants remain fearful as Beijing announced last week that it is looking into additional oversight over internet companies.


HANG SENG TECH INDEX DAILY CHART

1005_dfx3.png


Chart created with TradingView

US-China trade relations have also returned to the forefront, as Washington actively reevaluates the American supply chain in the wake of recent bottlenecks. In a speech given on Monday, U.S. Trade Representative stated that Washington will be enforcing “phase one” of a trade deal signed in January 2020. Tai also made China aware that tariffs were remaining in place, which may reignite tensions between Beijing and Washington. According to prepared remarks, the Biden Administration has serious concerns over “state-centered and non-market trade practices” emanating out of China.

Written by Brendan Fagan, Intern
@BrendanFaganFX on Twitter



Options involve risk and are not suitable for all investors. Please read Characteristics and Risks of Standardized Options before deciding to invest in options.

Related Posts

tastytrade content is provided solely by tastytrade, Inc. (“tastytrade”) and is for informational and educational purposes only. It is not, nor is it intended to be, trading or investment advice or a recommendation that any security, futures contract, transaction or investment strategy is suitable for any person. Trading securities can involve high risk and the loss of any funds invested. tastytrade, through its content, financial programming or otherwise, does not provide investment or financial advice or make investment recommendations. Investment information provided may not be appropriate for all investors, and is provided without respect to individual investor financial sophistication, financial situation, investing time horizon or risk tolerance. tastytrade is not in the business of transacting securities trades, nor does it direct client commodity accounts or give commodity trading advice tailored to any particular client’s situation or investment objectives. Supporting documentation for any claims (including claims made on behalf of options programs), comparison, statistics, or other technical data, if applicable, will be supplied upon request. tastytrade is not a licensed financial advisor, registered investment advisor, or a registered broker-dealer. Options, futures and futures options are not suitable for all investors. Prior to trading securities products, please read the Characteristics and Risks of Standardized Options and the Risk Disclosure for Futures and Options found on tastyworks.com.

tastyworks, Inc. ("tastyworks") is a registered broker-dealer and member of FINRA, NFA and SIPC. tastyworks offers self-directed brokerage accounts to its customers. tastyworks does not give financial or trading advice nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of tastyworks’ systems, services or products. tastyworks is a wholly owned subsidiary of tastytrade, Inc (“tastytrade”). tastytrade is a trademark/servicemark owned by tastytrade.

Quiet Foundation, Inc. (“Quiet Foundation”) is a wholly-owned subsidiary of tastytrade The information on quietfoundation.com is intended for U.S. residents only. All investing involves the risk of loss. Past performance is not a guarantee of future results. Quiet Foundation does not make suitability determinations, nor does it make investment recommendations. You alone are responsible for making your investment and trading decisions and for evaluating the merits and risks associated with the use of Quiet Foundation’s systems, services or products.

Small Exchange, Inc. is a Designated Contract Market registered with the U.S. Commodity Futures Trading Commission. The information on this site should be considered general information and not in any case as a recommendation or advice concerning investment decisions. The reader itself is responsible for the risks associated with an investment decision based on the information stated in this material in light of his or her specific circumstances. The information on this website is for informational purposes only, and does not contend to address the financial objectives, situation, or specific needs of any individual investor. Trading in derivatives and other financial instruments involves risk, please read the Risk Disclosure Statement for Futures and Options. tastytrade is an investor in Small Exchange, Inc.

© copyright 2013 – 2021 tastytrade. All Rights Reserved. Applicable portions of the Terms of use on tastytrade.com apply. Reproduction, adaptation, distribution, public display, exhibition for profit, or storage in any electronic storage media in whole or in part is prohibited under penalty of law, provided that you may download tastytrade’s podcasts as necessary to view for personal use.