HKG33 Rallies on New Chinese Stimulus
HKG33 Analysis
Beijing has been stepping up its efforts to support the sputtering economy, with a series of rate cuts and fiscal action over the summer. Today the central bank doubled down with wide-ranging measures. Among them are incoming cuts the amount of reserves banks must hold [1], lower mortgage rates on existing home loans [2] and a 500 billion yuan ($71 billion) liquidity scheme for stocks [3].
These measures are in the right direction and there is room for more, especially after the jumbo cut by the US Fed. The greenback's demise due to the pivot has led to a substantial appreciation of the ailing Yuan in the last three months, alleviating a source of concern for the PBoC.
Markets reacted positively with HKG33 rallying nearly 4% in one of its best days of the year. It now eyes the 2024 peak form May (19,794), but we are cautious around further gains.
On the other hand, the new plans are likely not the bazooka many participants are hoping for and the recent shift towards supporting consumption needs to be enhanced. Furthermore, bolder action risks creating renewed pressure to the Yuan and capital outflows, further stressing the financials of local governments and undermining the country's credit ratings.
On the technical front, the RSI points to highly oversold conditions creating scope for a pullback below the 18,500 region. Deeper decline though past the EMA200 (black line) that would negate the bullish bias, does not look easy under current conditions.
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. With extensive experience in market analysis and a strong foundation in international relations, he brings a unique perspective to financial markets. Nikos emphasizes not only technical analysis but also on fundamentals and the growing influence of geopolitics on financial trends.
As a Senior Financial Editorial Writer, he delivers comprehensive and forward-looking insights across a wide range of asset classes, including equities, commodities, and currencies. His work explores how macroeconomic events, political developments, and global policies impact market dynamics, providing readers with a deeper understanding of both short-term movements and long-term trends.
References
| Retrieved 24 Sep 2024 https://english.www.gov.cn/news/202409/24/content_WS66f21b32c6d0868f4e8eb30e.html | |
| Retrieved 24 Sep 2024 https://english.www.gov.cn/news/202409/24/content_WS66f21f44c6d0868f4e8eb31e.html | |
| Retrieved 17 May 2026 https://english.www.gov.cn/news/202409/24/content_WS66f22d00c6d0868f4e8eb322.html |
These materials constitute marketing communication and do not take into consideration your personal circumstances, investment experience or current financial situation. The content is provided as general market commentary and should not be construed as containing any type of investment advice, investment recommendation and/or a solicitation for any investment transactions. This market communication does not imply or impose an obligation on you to perform an investment transaction and/or purchase investment products or services. These materials have not been prepared in accordance with legal requirements designed to promote the independence of investment research and are not subject to any prohibition on dealing ahead of the dissemination of investment research.
FXCM, and any of its Affiliates, shall not in any way be liable to you for any inaccuracies, errors or omissions, regardless of cause, in the content of these materials, or for any damages (whether direct or indirect) which may arise from the use of such materials, services and their content. Consequently, any person acting on them does so entirely at their own risk. Please ensure that you read and understand our Full Disclaimer and Liability provision concerning the foregoing Information, which can be accessed here.