Widening trade deficit bearish for HK50
Hong Kong trade deficit widened in March. Will the HK50 decline continue?
Chinese economic data were weak recently: Caixin China manufacturing purchasing managers index dropped to 50.2 in April from 50.8 in March, while Hong Kong’s trade deficit widened to H$59.2 billion in March from H$48.8 billion in February. Mainland China’s factory activity weakened in April but still recorded expansion: a reading above the 50 level indicates an expansion in activity. Hong Kong trade deficit increased by 6.7% in March from H$55.5 billion in the same month of the previous year as exports fell 1.2% while imports declined 0.1%. The downtrend in Honk Kong’s exports is still intact due mainly to declining manufacturing and trade activities in the region, according to state statistics agency. The US-China trade dispute is a downside risk for Hong Kong stock market while there are positive developments: Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer resumed trade negotiations with China, with sides reportedly close to a final deal.
On the daily timeframe HK50: D1 is retracing after hitting 11-month high in mid-April.
Technical Analysis Summary
Position Sell
Sell Stop Below 29373.5
Stop loss Above 30176.5
Hong Kong trade deficit widened in March. Will the HK50 decline continue?
Chinese economic data were weak recently: Caixin China manufacturing purchasing managers index dropped to 50.2 in April from 50.8 in March, while Hong Kong’s trade deficit widened to H$59.2 billion in March from H$48.8 billion in February. Mainland China’s factory activity weakened in April but still recorded expansion: a reading above the 50 level indicates an expansion in activity. Hong Kong trade deficit increased by 6.7% in March from H$55.5 billion in the same month of the previous year as exports fell 1.2% while imports declined 0.1%. The downtrend in Honk Kong’s exports is still intact due mainly to declining manufacturing and trade activities in the region, according to state statistics agency. The US-China trade dispute is a downside risk for Hong Kong stock market while there are positive developments: Treasury Secretary Steven Mnuchin and Trade Representative Robert Lighthizer resumed trade negotiations with China, with sides reportedly close to a final deal.
On the daily timeframe HK50: D1 is retracing after hitting 11-month high in mid-April.
- The Parabolic indicator has formed a sell signal.
- The Donchian channel indicates downtrend: it is narrowing down.
- The MACD indicator is above the signal line with the gap narrowing. This is a bearish signal.
- The Stochastic oscillator is rising but has not reached the overbought zone.
Technical Analysis Summary
Position Sell
Sell Stop Below 29373.5
Stop loss Above 30176.5