Hong Kong Stocks Backed Off As Traders Lock Up From 3-Week Market Rally

Hong Kong stocks retreats a three-day upward streak as traders locked profits driven by market intervention and a worldwide hype in computing chips and artificial intelligence. Meanwhile, equities in mainland bourses paused, occurring at the same time with an official report indicating a slow pace on home prices.

Looking on Hang Seng index in this past week, it went up by 2.4% , marking a three-week rally and the longest since June 2023. However, it rebounded to about 11% from a 14-month low in January, even as shares of Hong Kong’s largest developers witnessed a setback ahead of the city’s budget reveal on February 28. 

Hong Kong’s Hang Seng index went up by 1.6% yesterday, then it slipped by 0.1% to 16,725.86 today, February 23. 

On the other hand, the Shanghai Composite index went up by 0.6%, and the CSI 300 shows an added 0.1% to cap a nine-day rally, its longest streak since January 2018. 

Meanwhile, the China Securities Regulatory Commission refuted a media report that claims that it had implemented trading restrictions on net-selling stocks at the opening and closing hours of trading. The commission clarified that the recent exchange measures aims to address abnormal trading behaviors as it is part of a market oversight and is not designed to restrict selling. 

Technical Analysis

Hang Seng index locks at 16,725.86, showing a 0.10% dip from its previous lock. Despite the downturn, Hang Seng shows a bullish phase based on the following indicators: RSI – 62.36 (overbought), STOCH – 97.603 (overbought), STOCHRSI – 18.313 (oversold), MACD – 117.37 (bullish), ADX – 47.723 (bullish), Williams %R – -2.297 (overbought), CCI – 66.5058 (bullish), ATR – 93.5064 (volatile), and ROC – 1.234 (bullish).

In summary, Hang Seng index appears to be bullish despite the signs of overbought conditions, suggesting potential for a correction in the short term.