The Hang Seng reacts to new Covid measures
As China confirmed to ease some of its strict Covid measures despite not changing its Covid-Zero policy, what can we expect from the embattled Hang Seng?
China’s state media finally confirmed that China will ease some of its strict Covid measures but was not yet in the position to change the Covid-Zero policy. Even so, the announcement still bolstered investor's confidence.
The Hang Seng index in Hong Kong jumped more than 7% last Friday and kicked off the new week with a 3% gain.
China’s new Covid policy
China has been committing to "Covid-Zero" policy measures to control the outbreak of the virus since the early days of the pandemic. The country has now become one of the few destinations that still require centralized quarantine when travellers arrive.
According to the new policy, China will change the duration of compulsory quarantine at a centralized facility from seven days to five days, followed by three days of self-quarantine or "home observation".
China's contact tracing policy change
In the previous model, all close connections, including people who were connected to travellers are viewed as “tracking targets”. Starting from November, “close contact” only applies to people interacting with individuals with confirmed Covid infections.
Hang Seng technical analysis
Hang Seng enjoyed a significant rally since the early days of November to break through the two-month-long descending channel. So far, the price has regained support from the 50-day MA, with the 100-day MA just nearby.
The key level to watch here is 18150, which represents the previous high from October 10th. Any bounce above this level could form a newer high to cement the view for a bottom-out. On the other hand, any near-term retreat would seek support from the level around 17046.
Hang Seng daily chart
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