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 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 ensure that you fully understand the risks involved.

China GDP beats expectations: Hang Seng and SSE Index may extend gains

China GDP and retail sales beat expectations, but fixed asset investment slowed; the Shanghai Composite Index has risen above key resistance, while the upward momentum in the Hang Seng Index appears is improving.

Source: Bloomberg

China/Hong Kong equities could be gearing up for another leg higher as the recovery in the world’s second-largest economy picks up steam.

Data released on Tuesday Asia morning showed the Chinese economy grew 4.5% on-year in the January-March quarter, well above 4% expected, and 2.9% in the previous quarter.

  • Industrial production rose 3.9% in March Vs 4% forecast, up from 2.4% in February
  • Retail sales 10.6% last month Vs 7.4% expected, and above 3.5% in February
  • Fixed asset investment grew 5.1% in March Vs 5.7% expected, and 5.5% in February.

China Economic Surprise Index

Source data: Bloomberg, created in Excel

This follows a string of upbeat China data in recent weeks - Economic Surprise Index for China this month hit the highest level at least since 2014 – reflecting the positive spillovers from the economic reopening.

Furthermore, hopes of a turnaround in the property cycle (new homes prices rose in March at the fastest pace in 21 months) and hopes that regulatory crackdown on corporates could be ending suggest the growth spurt could turn out to be more than temporary.

Shanghai Composite Index daily chart

Source: TradingView

Consensus expects about 5.3% on-year growth for China for the year 2023, up sharply from around 4.3% in January.

The upgrading in the growth outlook bodes well for China/Hong Kong equities – despite the rebound since late 2022, from a valuation perspective, Chinese equities are trading below the past 20 years' average.

Hang Seng Index daily chart

Source: TradingView

Shanghai Com: rises above a key barrier

The Shanghai Composite Index’s break above a key hurdle at the early-March high of 3343, roughly coinciding with the 89-week moving average (the rebound in 2022 ran out of steam at the Fibonacci moving average).

The index looks set to retest the mid-2022 high of 3425 and any break above 3425 would trigger a major double bottom (the 2022 lows), potentially opening the way for around 15% - above the 2021 high of 3730.

Shanghai Composite Index weekly chart

Source: TradingView

Hang Seng: beginning to flex muscles

The Hang Seng Index’s hold above vital support at the December low of 18885 confirms that the higher-top-higher-bottom sequence (that is, an uptrend) from the end of 2022 remains in place. The colour-coded charts suggest the bullish phase in the index has resumed (see chart).

The Hang Seng Index is now testing crucial resistance on a horizontal trendline from early March at about 21000, roughly coinciding with the upper edge of the Ichimoku channel on the daily chart.

A decisive break above the resistance could open the door toward the January high of 22700.

Hang Seng Index daily chart

Source: TradingView
  1. Note: In the above colour-coded chart, blue candles represent a Bullish phase. Red candles represent a Bearish phase. Grey candles serve as Consolidation phases (within a Bullish or a Bearish phase), but sometimes they tend to form at the end of a trend.
  2. Note: Candle colors are not predictive – they merely state what the current trend is. Indeed, the candle color can change in the next bar.
  3. False patterns can occur around the 200-period moving average, or around a support/resistance and/or in sideways/choppy market.
  4. The author does not guarantee the accuracy of the information. Past performance is not indicative of future performance. Users of the information do so at their own risk.

IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.

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. Please see important Research Disclaimer.

Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

Explore the markets with our free course

Discover the range of markets you can spread bet on - and learn how they work - with IG Academy's online course.

Turn knowledge into success

Practice makes perfect. Take what you’ve learned in this index strategy article, and try it out risk-free in your demo account.

Ready to trade indices?

Put the lessons in this article to use in a live account. Upgrading is quick and simple.

  • Get fixed spreads from 1 point on FTSE 100 and Germany 40
  • Protect your capital with risk management tools
  • Trade more 24-hour markets than any other provider – 26 in total

Inspired to trade?

Put the knowledge you’ve gained from this article into practice. Log in to your account now.

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.

Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.

The Momentum Report

Get the week’s momentum report sent directly to your inbox every Monday for FREE. The Week Ahead gives you a full calendar of upcoming key events to monitor in the coming week, as well as commentary and insight from our expert analysts on the major indices to watch.

For more info on how we might use your data, see our privacy notice and access policy and privacy webpage.

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.