Hang Seng Index exhibits cautious optimism
The Hang Seng Index (HSI) concluded the previous trading week with 2.1% gains. Despite positive developments regarding US-China trade tensions, investors in Chinese and Hong Kong equities demonstrated greater caution than their US counterparts. Mixed corporate earnings reports have also weighed on index performance.
JD.com reported impressive revenue growth of 16% to 301.1 billion yuan, with sales of premium products driving net income 53% higher. However, investor sentiment remains cautious regarding JD’s strategic investments in the intensely competitive food delivery sector and potential adverse implications for future profitability. Tencent registered robust revenue expansion of 13% to 180 billion yuan, primarily driven by gaming and advertising businesses. Conversely, Alibaba underperformed both revenue and earnings expectations, intensifying investor concerns regarding weakness in Chinese consumer expenditure and heightened competition within the AI cloud infrastructure segment.
Technical analysis continues to indicate a medium-term bullish trajectory for the HSI. However, momentum has failed to accelerate following the breach of the 50-day SMA, despite significant developments in US-China trade negotiations. The index is currently undergoing a consolidation phase, awaiting additional catalysts to propel it toward the psychologically significant 24,000 threshold. The absence of further positive catalysts may result in the index conforming to a Wave C trajectory within the Elliott Wave Theory framework, potentially directing it toward the 19,000 level.
