The Hang Seng remains in freefall, Alibaba below 100

Equity investors have been attacked on multiple fronts

Global equity markets have suffered these past two weeks since Russia invaded Ukraine. But it should be remembered that these markets were already under pressure ahead of the invasion. There had been a build-up of tensions this year, as Russia had actually began rallying their troops back in November. Investors also had to contend with the prospects of the Fed’s tightening cycle, which then prompts either central banks to follow suit. Yet rising oil prices has rekindled fears of stagflation, which is negative for equity markets.

Hang Seng falls to a five-year low

And if we hone in-on Asia, investors also had the regulatory crackdown to contend with, which shows no signs of abating. For example, Beijing have since proposed a further tightening of the regulatory screws on the gaming industry, which has weighed on Tencent and NetEase, and of course the broader market. And as for Hong Kong, resident are living in fear of a mainland-China lockdown potentially on the horizon, and that can be clearly seen on the Hang Seng (HSI) which has fallen to a 5-year low.

We can see on the daily chart that the Hang Seng is effectively in freefall, and close -19% lower form its year-to-date high. It has since fallen below the March 2020 low which is significant, as it marks the height of the pandemic when central banks flooded financial markets with easy money. So the fact it has broken that milestone level is very telling, and the market now appears set to test 20,000 whilst prices remain below 21,328.

Alibaba’s bearish target remains in play

We highlighted Alibaba’s head and shoulders top pattern in February, and it remains very much in play. Their Q4 revenue was a disappointment which saw the market gap below the neckline and is now trading below $100. We can see that it has gapped higher on the HKEX exchange as appetite for risk is making a return. But with a multi-month downtrend and break of key support (108 – 110) last month, our downside target around $83 remains in focus. From here we would like to see bearish reversal patterns below 108 to allows for fresh shorts. And the bearish bias is invalidated with a break above $111.

Alibaba Company Profile

How to trade with FOREX.com

Follow these easy steps to start trading with FOREX.com today:

Open a Forex.com account, or log in if you’re already a customer.
Search for the pair you want to trade in our award-winning platform.
Choose your position and size, and your stop and limit levels.
Place the trade.

StoneX Financial Ltd (trading as "FOREX.com") is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, FOREX.com does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date.

This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it. No opinion given in this material constitutes a recommendation by FOREX.com or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although FOREX.com is not specifically prevented from dealing before providing this material, FOREX.com does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation. For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 74% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

FOREX.com is a trading name of StoneX Financial Ltd. StoneX Financial Ltd is a company incorporated in England and Wales with UK Companies House number 05616586 and with its registered office at 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is authorised and regulated by the Financial Conduct Authority in the UK, with FCA Register Number: 446717.

FOREX.com is a trademark of StoneX Financial Ltd. This website uses cookies to provide you with the very best experience and to know you better. By visiting our website with your browser set to allow cookies, you consent to our use of cookies as described in our Privacy Policy. FOREX.com products and services are not intended for Belgium residents.