CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money. CFDs are complex instruments. You can lose your money rapidly due to leverage. Please ensure you understand how this product works and whether you can afford to take the high risk of losing money.

Hang Seng jumped as China's inflation cooled and lockdown alarm off

Although the Hang Seng has moved sideways from the upward trajectory that brings the index up 7% during the first two weeks of February, the price stayed firmly above all the key moving averages.

China’s January CPI and PPI

China reported today (January 16) that its January consumer price index (CPI), which measures the price of consumer goods and services, rose 0.9% year-on-year. The reading was lower than expected as the prediction for CPI is to up 1.0% from the previous year, and significantly down from 1.5% in December. China’s factory-gate prices also slowed down its growth pace, with the producer price index (PPI) rising 9.1% in January year-on-year, compared with a 10.3% in December.

The fresh print is in line with the broad view that inflation continued to cool in China and cements the prospect for the People’s Bank of China (PBOC) to reduce borrowing costs further. Although this week the PBOC announced it would leave the rate unchanged, the central bank has already injected a net 100 billion yuan ($15.7 billion) into the banking system to pump up the liquidity in the economy for a second straight month.

Moving in the opposite direction to the counties like US and UK, China is not concerned about inflation. Instead, monetary stimulus is more expected to be the centric policy to stabilise its slowing economy. As a result, the equity market in mainland China and Hong Kong is expected to be sheltered from the volatility across developed countries triggered by the tightening monetary policy move.

Hang Seng Technical Analysis

Apart from the boost from China, the removal of the “lockdown alarm” is another reason to see the Hong Kong HS50 jumping up. On Tuesday, Hong Kong’s leader Carrie Lam confirmed that “a complete, wholesale lockdown” is off the table, a scenario where residents are forced to mostly stay in their homes for weeks until case numbers reduce or clear.

Although the Hang Seng has moved sideways from the upward trajectory that brings the index up 7% during the first two weeks of February, the price stayed firmly above all the key moving averages. The conjunction of 20 and 50 day moving averages should provide a strong support for the Hang Seng in near-term. Critical pressure will be coming from the lower boundary of that moving tunnel at around 25049 after Hang Seng breaks through the closest pressure level at 24865.

From a near-term perspective, the 4-hours chart shows that the price has managed to stand on the 20-hours moving average line while 50-hours will be the next challenge to conquer. The short-term momentum is on the rises as the RSI reading moves towards the 50-above zone.

Take your position on over 13,000 local and international shares via CFDs and trade it all seamlessly from the one account. Learn more about share CFDs or open an account to get started today.


This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research 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.

Take a position on indices

Deal on the world’s major stock indices today.

  • Trade the lowest Wall Street spreads on the market
  • 1-point spread on the FTSE 100 and Germany 40
  • The only provider to offer 24-hour pricing

Live prices on most popular markets

  • Forex
  • Shares
  • Indices
liveprices.javascriptrequired
liveprices.javascriptrequired
liveprices.javascriptrequired

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.