Hang Seng Index: What's next as it erases previous gains?

The Hang Seng Index might be headed for a period of consolidation, now that all major global events are behind us.

It was an underwhelming start to the week for the Hang Seng Index.

After hitting an eight-month high last Monday and again briefly in early trade this morning, the benchmark then went on a downward slide, losing 0.52% by 9.50am on Monday morning (20 January), before falling some more to finish the day at a low of 28,795.91.

Consolidation at 28,500 points?

If that is not an indicator that the Hang Seng’s run of good fortune might be coming to an end in the interim, one market watcher is expecting the index to fall further and stabilise around 28,500 points.

That’s according to Alan Li, portfolio manager at investment management firm Atta Capital, who explained that the market is back in regular mode, with the phase-one US-China trade deal already concluded and no new geopolitical event on the horizon.

‘All good news has come out already, and there is not much stimulus that the market can expect in the near future,’ he told South China Morning Post.

Furthermore, he said investors were also likely reacting to the country’s central bank announcement this morning to keep its one-year loan prime rate unchanged at 4.15% for January from the previous month.

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Biggest losers and gainers

Hong Kong property developers found themselves driving much of the short selling momentum, with all 11 listed companies either trading flat or negatively. China Overseas Land & Investment Limited was down as much as 2.87% to HK$28.80 from a starting price of HK$29.50, China Resources Land Limited lost 2.81% to HK$36.35, and Country Garden Holdings Co Ltd erased 2.15% to finish the day at HK$11.82.

Meanwhile, tourism-related and hospitality stocks were also hit hard, with the Wuhan pneumonia virus outbreak negatively impacting (or expected to) travel and visitor numbers.

In aviation, Air China descended as much as 7.6 per cent to HK$7.20, while China Eastern Airlines fell seven percent to HK$3.98. In leisure and entertainment, Macau casino operator SJM Holdings Limited lost 6.7% of its share value, while MGM China Holdings Limited shed six percent to HK$13.88.

In positive news, the biggest gainer of the day was Sino Biopharmaceutical Limited with a five percent share price rally; followed by China Mobile Limited, which saw share value rise 3.7% on the day; and finally China Life Insurance Co Ltd, which added nearly one percent to market valuation.

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