Skip to content

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved. CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your deposits, so please consider our Risk Disclosure Notice and ensure that you fully understand the risks involved.

Hang Seng Index: China’s stimulus boost in doubt

Beijing has stepped up its support for its beleaguered economy with a new phase of central government interventions. However, these bolstering measures only managed to support Chinese stocks for one day.

Source: Bloomberg

After reporting better-than-expected GDP growth in the third quarter of the year, Beijing has stepped up its support for its beleaguered economy this week with a new phase of central government interventions. However, these bolstering measures only managed to support Chinese stocks for one day.


China’s new stimulus measures


China announced its new economic stimulus plan on Tuesday, which includes increasing the fiscal deficit ratio from 3% to 3.8% of the gross domestic product (GDP) and issuing an additional 1 trillion yuan ($137 billion) in sovereign debt during the fourth quarter, with the claimed intention to support disaster relief and infrastructure.


It's worth noting that China has rarely adjusted its budget mid-year, with previous instances occurring in 2008 following the Magnitude 7.9 Sichuan earthquake and during the late 1990s amid the turmoil of the Asian financial crisis. Hence, it’s not hard to see that this week’s move not only open the door to the next level of support from central government but, more importantly, highlights the heightened sense of urgency among top policymakers to revitalize the economy.


So, how are investors responding to the new boost?


Equity markets initially reacted positively to the support measures, however, the rally didn’t last long and the price movements suggested that traders remain skeptical of whether these supports are sufficient to halt the downtrend of the world's second-largest economy.


The CSI 300 Index closed only 0.5% higher on Wednesday, less than half of its earlier gains which Hong Kong’s Hang Seng Index finished up by less than 1% despite jumping as much as 3% in early hours.


Hang Seng Index


Hang Seng’s daily chart has revealed a newly formed downward-sloping trendline resistance (red line), while support is being held around the previous August-October trendline (black line).


It appears that the yearly-low level at 16,971 may face another test in the near term before breaking and opening up the floor to the November 28th, 2022 swing low at 16,812. Furthermore, the Relative Strength Index (RSI) also points to a downside risk as it is now hovering close to the over-sold territory below the midpoint. On the flip side, imminent resistance comes from the early October low, sitting at 17,176.

Source: IG

Hang Seng Tech Index


Jumping out from its bear-market zone, Hang Seng Tech Index briefly attempted to regain the 20-day moving average (MA) but quickly retreated under a distinct resistance at 3754 (early Oct low).


Overall, the price remains closely aligned with its descending trajectory and faces the risk of retesting its four-month-low in the range of 3600-3619 if slides further.

Source: IG

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.

Seize your opportunity

Deal on the world’s stock indices today.

  • Trade on rising or falling markets
  • Get one-point spreads on the FTSE 100, 1.2 on the Germany 40, and 0.4 on the US 500
  • Unrivalled 24-hour pricing

See opportunity on an index?

Try a risk-free trade in your demo account, and see whether you’re on to something.

  • Log in to your demo
  • Try a risk-free trade
  • See whether your hunch pays off

See opportunity on an index?

Don’t miss your chance – upgrade to a live account to take advantage.

  • Get spreads from one point on the FTSE 100, 1.2 on the Germany 40, and 0.4 on the US 500
  • Trade more 24-hour indices than any other provider
  • Analyse and deal seamlessly on smart, fast charts

See opportunity on an index?

Don’t miss your chance. Log in to take your position.

Live prices on most popular markets

  • Forex
  • Shares
  • Indices

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.

You might be interested in…

Find out what charges your trades could incur with our transparent fee structure.

Discover why so many clients choose us, and what makes us a world-leading provider of CFDs.

Stay on top of upcoming market-moving events with our customisable economic calendar.