Hang Seng Slides to Key Support as Chinese Inflation Remains Subdued

  • HKG33
    (${instrument.percentChange}%)

HKG33 Analysis

China's post pandemic recovery has been bumpy, with a distressed property market, subdued factory activity and weak domestic demand. Today's data show that the country has not escaped deflationary risks, as CPI steadied at 0.3% y/y. Although being the third straight print above zero, inflation has been hovering around this threshold the past year.

After the February-May relief rally, HKG33 has pulled back over the past few weeks and extends the slide today, moving below the EMA200 and testing the pivotal 38.2% Fibonacci of this year's high/low advance. This brings the ascending trend lie from the 2024 lows in the spotlight, although bears would need fresh impetus to challenge it.

Even if it has refrained from bold stimulus, Beijing has been taking a series of measures to support the economy, prop the real estate market and spur domestic consumption. At the same time, China has found new growth pillars in electric vehicles, car batteries and solar cells. Both the IMF [1] and the World Bank [2] recently updated their 2024 GDP forecasts for the country, to 5% and 4.8% respectively.

On the technical front, HKG33 tries to hold the critical 38.2% Fibonacci and successful effort would allow it to retake the initiative and the provide the opportunity to chase new 2024 highs towards 20,376.

Nikos Tzabouras

Senior Financial Editorial Writer

Nikos Tzabouras is a graduate of the Department of International & European Economic Studies at the Athens University of Economics and Business. He has a long time presence at FXCM, as he joined the company in 2011. He has served from multiple positions, but specializes in financial market analysis and commentary.

With his educational background in international relations, he emphasizes not only on Technical Analysis but also in Fundamental Analysis and Geopolitics – which have been having increasing impact on financial markets. He has longtime experience in market analysis and as a host of educational trading courses via online and in-person sessions and conferences.

References

1

Retrieved 11 Jun 2024 https://www.imf.org/en/News/Articles/2024/05/28/pr24184-china-imf-staff-completes-2024-art-iv-mission

2

Retrieved 19 Jul 2024 https://openknowledge.worldbank.org/server/api/core/bitstreams/aa9feaf4-0331-467d-9f46-10b9a1aef5a9/content

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