Dec 21, 2023

The Hang Seng index has tested a level that provided support for an early 2023 rally.

HSI-–-Weekly-Chart

HSI – Weekly Chart

The Hang Seng has been testing a key level from 2022 over the last two weeks, which provides weekly resistance. A strong weekly gain above 16,842-17,000 could see the index power higher to the downtrend resistance at 18,000.

Hong Kong stocks were boosted by a leadership change at Alibaba to strengthen its e-commerce business. After the company reshuffled its executives, Alibaba climbed to the highest level since November. According to an internal memo, PDD Holdings continued to attack its market share.

“The reshuffle is aimed at finding new growth driver for its e-commerce business that’s been battered by rivals including from live-streaming platforms,” said Dai Ming at Huichen Asset Management. “On the other hand, Alibaba may also start to adjust its sprawling investment portfolio.”

Hong Kong traders also have to consider the path of the US dollar after the Federal Reserve hinted at rate cuts as the following likely path. That has spurred record levels in the Nasdaq and Dow Jones, with the S&P 500 only 0.60% away.

The Hang Seng also got support from Chinese economic numbers, showing that the economy was turning. In a report, the National Bureau of Statistics said that the country’s retail sales rose 10.1% in November. The country’s unemployment rate remained at 5.0% while industrial production rose by 6.6%, marking the fastest growth over two years. The industrial production outpaced the median estimate of 5.6%.

A strong weekly close this week could lead to a follow-through rally into year-end and set the stage for 2024 gains.

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