Nov 14, 2023

A positive day in the Hang Seng on Monday gives trades hope for the week ahead. 

HANG-SENG-–-Weekly-Chart

HANG SENG – Weekly Chart

The Hang Seng closed at 17,426. The 16,842 level held stocks up in November last year and may again support a push to 19,000 or 20,000. A breakdown below that level could lead to a retest of the lows. 

Wall Street optimism helped to lift Asian shares on Monday, and a Moody’s downgrade of US debt on Friday is another potential boost for Asian investment. The ratings agency downgraded the country from AAA to AA+, citing the debt ceiling arguments and debt affordability. It is the third ratings downgrade for the world’s largest economy this year after Fitch and Standard and Poor’s did the same. The White House disagreed with the move. 

There was also a weak treasury auction last week as fears over supply hit the market.  

“…there has been a material deterioration in liquidity in US Treasuries. The Bloomberg measure of Treasury market liquidity based off persistent dislocations from fair value is at an extreme right now,” ING analysts said 

But China’s economy is also weak after slipping back into deflation last month, dragged lower by falling pork prices as policymakers struggled to reignite domestic demand. The consumer price index fell by 0.2 percent year over year in October, according to the National Bureau of Statistics on Thursday, compared with a 0.1 percent fall forecast by a Reuters poll of analysts. The CPI was unchanged in September. 

China struggles to lure foreign investors back as data shows more direct investment flowing out of the country than coming in. Companies may diversify their supply chains to reduce risks. Foreign direct investment fell by $11.8 billion from July to September, marking the first contraction since records began in 1998

Hong Kong has lowered its annual economic growth forecast, indicating a challenging macro environment. The revision comes after the city reported weaker-than-expected third-quarter GDP growth, highlighting economic challenges despite a recent tourism revival.

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