To The Moon

HANG SENG INDEX OUTLOOK: BULLISH

• The HSI underperformed global peers amid a technology crackdown and a slowing economy
• Easing property rules and lowering borrowing costs may boost market confidence
• The HSI breached above a “Falling Wedge” pattern, opening the door for further gain

Hang Seng Index vs. S&P 500 Index – 12 Months Performance

There are a couple of positive catalysts at the start of the year. Chinese authorities have drafted rules to allow property developers more access to escrow funds, providing crucial help for them to meet debt obligations. The relaxation of property rules ignited hopes that policymakers will also ease rules on the technology sector, alleviating pressures on stocks such as $TENCENT(00700)$ ,$Alibaba(09988)$ and$MEITU(01357)$ .Their share prices have fallen sharply last year after authorities tightened the grip on tech firms, accusing them of monopoly practices. Alibaba has lost over 60% of its market value from its all-time highs, and the stock may be overly punished due to its strong fundamental and dominant position in China’s e-commerce market.

TopConstituents in theHang Seng Indexby Market Cap

HANG SENT INDEXTECHNICAL ANALYSIS

The Hang Seng Index (HSI) breached above a “Falling Wedge” pattern from the upside, opening the door for further upside potential. The “Falling Wedge” is typically a bullish trend-reversal pattern, which paves the way for a strong technical rebound after a prolonged period of consolidation.

The index has also likely formed a “Double Bottom” chart pattern with strong support found at 22,800. The “Double Bottom” is also a common bullish trend-reversal pattern, suggesting that selling pressure may be depleting after prices touch the “bottom” twice.

An immediate resistance level can be found at around 24,900 – the 127.2% Fibonacci extension. Breaching above this level may expose the next resistance level of 25,600. The MACD indicator is trending higher above the neutral midpoint, underscoring bullish momentum.