The Hang Seng Index held steady on Tuesday as Chinese investors continued to accumulate. It was trading at H$25,557 on Tuesday, its highest level since November 2021, and 75% above the lowest point this year.
Chinese stocks are booming
The Hang Seng Index has held steady in the past few months as retail investors continued to accumulate. This jump is likely because of the Fear of Missing Out (FOMO) among investors.
Chinese stocks have also done well because of the excess savings, estimated at $23 trillion, among locals following the collapse of the real estate industry. As such, with limited places to invest, many people are turning to the stock market.
At the same time, margin trading has continued to boom this year. Data compiled by Bloomberg show that the outstanding amount of margin trades in the onshore equities market rose to 2.28 trillion yuan, which is equivalent to $320 billion, a record high.
The stock market surge is also happening as Chinese investors bet that the economy will continue growing. Most importantly, there is hope that China will have a leading role in emerging technologies like artificial intelligence.
Beijing has also continued to rein in on overcapacity and promote healthy competition in the country.
Top Hang Seng Index movers this year
The Hang Seng Index has had some major movers this year. Meituan’s share price has slumped by over 33% this year, making it the worst performer in the Index. Its cause is because of the ongoing breakneck competition with other company like JD and Alibaba.
In a recent report, Meituan said that, while its revenue increased by over 11%, the profit slumped by almost 100% during the quarter.
JD stock price has slumped by 10% this year as its core business slows and the company spends tons of money on marketing it food delivery business.
Li Auto stock price has barely moved this year as concerns about competition and the aggressive price wars continue. Last week, BYD, the biggest company in the industr,y published results that showed the implications of competition in the sector.
Read more: Very bad news for Li Auto, XPeng, and Nio stock prices
The best-performing companies in the Hang Seng Index are firms like Sino Biopharmaceutical, CSPC Pharmaceutical, Chow Tai Fok Jewellery, and JD Health. All these stocks have jumped by over 100% this year.
WuXi Apptech and WuXi Biologics, which came under pressure amid U sanctions, have risen by over 100% this year. Alibaba share price has soared by 66%.
Hang Seng Index analysis
The weekly chart shows that the Hang Seng Index has been in a strong uptrend in the past few months, moving from a low of $14,605 in 2022 to $25,460.
It recently formed the highly bullish golden cross pattern on May 6 as the 50-week and 200-day week moving averages crossed each other.
The Hang Seng has also moved above the 50% Fibonacci Retracement level, while top oscillators like the Relative Strength Index and the MACD have continued rising.
Therefore, the index will likely continue rising as bulls target the key resistance level at $26,300, the 61.8%Fibonacci Retracement level.
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