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Hong Kong stocks continue to slide as China retorts US sanctions

The Hang Seng Index is down nearly 3% this week, as US and China remain locked in a dispute over Beijing's treatment of Hong Kong and Xinjiang.

Hang Seng Index Chart History Latest Price Forecast Outlook Prediction Analysis Hong Kong indices HSI stocks equities China US trade security law Tencent HKEX Geely HSBC share price Source: Bloomberg

What’s the latest on Hang Seng Index?

Hong Kong blue-chip stock benchmark Hang Seng Index continues on an acute descend this week, two days after the US stripped the financial hub of its special trade and commerce status.

The Hang Seng plunged 1.3% within the first 90 minutes of trading on Thursday 16 July 2020. As at 12:45 HKT, the index is trading at 25,195.6, based on live IG data. The barometer is down nearly 3% this week.

IG market analysis show that ‘buys’ form 52% of all trades on the counter today, and 50% of all trades this week.

In addition, 60% of IG client accounts with open positions in this market expect the price to rise, with the remaining 40% of clients expecting the Hang Seng Index’s price to fall.

Are you looking to buy long and sell short the Hang Seng Index without having to trade the actual asset? IG’s CFD feature allows you to do just that.

China plans to ‘make necessary responses’ to US sanctions

On Tuesday 14 July, US President Donald Trump signed an executive order that overwrites the United-States-Hong Kong Policy Act of 1992, under which the US had treated Hong Kong differently from mainland China particularly in the areas of trade and commerce.

This new legislation – called the Hong Kong Autonomy Act, which also includes sanctions on senior Chinese government officials responsible for the implementation of a draconian security law in Hong Kong, meant that Hong Kong would now receive the same treatment as mainland China.

Trump had approved the bill following weeks of disputes with Beijing over its handling of Hong Kong’s affairs, alleged human rights abuse in the Xinjiang province, as well as the spread of Covid-19.

The new law, first proposed in May by the US Congress, authorises Trump’s administration to impose sanctions on any officials or institutions that have been found complicit in the ongoing subversion of Hong Kong’s autonomy.

On Wednesday 15 July, China’s foreign ministry said it ‘firmly opposes and strongly condemns’ the Hong Kong Autonomy Act, and that it plans to ‘make necessary responses to protect its legitimate interests, and impose sanctions on relevant US personnel and entities’.

What’s the outlook for Hang Seng Index?

Looking ahead, Daily FX strategist Margaret Yang wrote on Wednesday that any further escalation of US-China tensions will probably weigh on Asia-Pacific equities – including Hong Kong stocks, on top of rising virus concerns.

On a technical basis, she noted that the Hang Seng Index had found immediate support and resistance levels at 25,000 and 26,000 respectively.

Meanwhile, in terms of individual company share price movements, top losers so far on Thursday are: Geely Automobile Holdings (-6.78%); Hong Kong Exchanges and Clearing (HKEX) (-3.7%); Tencent Holdings (-3.22%); and AIA Group (-0.82%).

In terms of volume, Tencent is the most traded stock of the day on the IG platform, followed by HSBC Holdings (Hong Kong) and HKEX.

How to trade indices with IG

Are you feeling bullish or bearish on the Hang Seng Index? Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps:

  • Create a live or demo IG Trading Account, or log in to your existing account
  • Enter <Hong Kong HS50> in the search bar and select the instrument
  • Choose your position size
  • Click on ‘buy’ or ‘sell’ in the deal ticket
  • Confirm the trade

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. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer.

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