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Positive leads beckon for Hang Seng

Hong Kong shares are up over 8% year-to-date, and have been testing new record highs since breaking through 25,000 points last month.

China business district
Source: Bloomberg

Last week it had faced some choppy sessions with a lack of leads, but this week is likely to see a clearer direction with the release of various Chinese macroeconomic data.

Kicking off the week, we’re expecting to see the release of Chinese trade balance figures on Monday (no details on exact time).

The market consensus is for exports growth to show a print of 9% for August, after 14.5% in July.

On the broad scheme of things, this will suggest some stabilisation after some poor Q1 numbers. Imports are expected to grow 3%, versus the prior month’s dip of 1.6%.

On Thursday (0930am SGT), we’ll see inflation numbers with August Producer Price Index (PPI) which is expected to be lower at -1.1% year-on-year, versus -0.9% in July. Consumer Price Index (CPI) is also expected to slow at 2.2% after July’s rise of 2.3%.

China retail sales will be out on Friday (1330pm SGT), where the market consensus forecast is for growth to be flat at 12.2% year-on-year in August.

Any positive upside is likely to spur Chinese shares to edge up higher. Though any marginally disappointing data will likely still see overall sentiment being optimistic as investors bet on more stimulus measures from Chinese authorities.

Ahead of the Hong Kong open

On a technical level, the MACD has crossed above its signal line, which suggests a buy signal for traders. This is likely to see the Hang Seng continue on its uptrend and test the upper limit of the Bollinger Bands in the interim.

We are expecting some optimism to lift Chinese stocks this week as investors position themselves ahead of the round of Chinese data. On that basis, we are calling the Hang Seng Index to open 0.22% higher at 25,287 points.

Hong Kong HS50 Cash
Click to enlarge

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