Hong Kong 50

The inverted relationship between USD/HKD and the Hang Seng remains strong. And with the latter retracing -92% over the past month and risk of the US dollar falling further, perhaps the Hang Seng is due a bounce.

Whilst the yuan has continued to decline against the US dollar, its weakness can be noted against several currencies as China let’s their currency slide.

Whilst the yuan has continued to decline against the US dollar, its weakness can be noted against several currencies as China let’s their currency slide.

Whilst the overall trend and sentiment point lower, yesterday’s false break of support could provide a potential bounce for the Hang Seng index.

Alibaba rose around 6% during Asian trade after announcing its intention to apply for a primary listing in Hong Kong.

China’s GDP is expected to have softened to 4.4% y/y in Q2, which would be its lowest level since June 2020.

Whilst the promise of fiscal stimulus propelled Asian markets higher, news of Shanghai’s lockdown risks denting sentiment for the region.

We saw a strong finish for global equities last week, and as the Dow Jones was an outperformer during the recent turmoil, we suspect it could outperform during a recovery.

Volatility for European and parts of Asia remain high for equity traders, yet US markets have shown minor signs of stability above key support levels.

There seems to be little reprieve for investors in China with the Hang Seng falling to a post-pandemic low and Alibaba trading below 100.

Alibaba is expected to report earnings for Q4 tomorrow, and it is likely to directly impact which way momentum turns from a key support level it currently hovers above.