The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.
The Hang Seng had a few choppy sessions last week, with a relatively light week of macro data. This week, the markets should get a clearer direction from a round of Chinese PMI numbers.
At 9am this morning (Singapore time), we’ll get an indicator of China’s economic growth with its official manufacturing PMI for August.
The reading is expected to come in lower at 51.2, versus the prior month’s reading of 51.7.
Another indicator will be released at 9.45am (Singapore time), where we should see the final numbers for HSBC China manufacturing PMI for August. The consensus forecast is calling it to be flat at 51.3.
Later in the week on Wednesday, other data points to watch out for include non-manufacturing PMI and HSBC services PMI. The non-manufacturing PMI numbers will be interesting to watch after a print in July of 54.2 – a six-month low.
If the readings are positives, a short-term lift can be expected for Hong Kong shares. On the flipside, any disappointing numbers will cap any gains.
We expect some optimism to trickle back into the markets in the early part of the week, following the positive leads from Wall Street on Friday.
Investor confidence will also be further boosted by news that Chinese policy makers have eased rules on local government bond sales. This is expected to help improve their liquidity and financial transparency.
Ahead of the Hong Kong Open
On a short-term view, there is some bearish momentum in the Hang Seng index, so we are calling for Hang Seng to open 0.16% lower at 24,692.3 points.
However, on a long- term view, the Hang Seng is on an upwards trend, so there is some value to buy on the dips off the support.
Any positive macro data today could prompt a short-term rebound and accelerate any moves by the index. Traders can consider entering a long position once it breaks through the support-turned-resistance level of 24,740 with a potential stoploss at 24,420.