The Hang Seng Index is currently forming a hammer pattern, having previously breached its support level
On Monday, the Hang Seng Index (HSI) opened with a gap down and experienced fluctuations in the morning session before rebounding from a low of 18,554.51 points at 11:13. The afternoon session showed a biased upward trend, and the HSI closed at its daily high. The total intraday volatility was 238.31 points, with a total turnover of 1041.47 billion yuan. The HSI, CSI (China Securities Index), and HSCI (Hang Seng China Enterprises Index) fell by 1.58%, 1.79%, and 1.52% respectively.
The HSI hit its lowest level since July 11 and briefly fell below the lower boundary of the Bollinger Bands. However, a rebound occurred in the market, and it ultimately closed with a bullish "hammer" candlestick pattern, suggesting some support around the 18,600 level. The bearish divergence in the MACD expanded. Among the stocks traded throughout the day, 446 rose while 1,213 declined, indicating a generally weak market condition.
Country Garden (2007) issued a profit warning, and its onshore listed bonds were suspended from trading, causing the stock price to decline by 18.367%, making it the largest drop among blue-chip stocks. Its subsidiary, Country Garden Services (6098), also fell by 9.651%, ranking as the second-largest decline among blue-chip stocks.
US Treasury Secretary Yellen stated that China's slowing economic growth, the Russia-Ukraine conflict, and climate-related disasters could pose risks to global economic development. However, overall, she remains optimistic about the US economy. The US dollar index rose above the 103 level, reaching a one-month high, and the three major US stock indices showed positive performance.
The decline in overnight futures and ADRs suggests a bearish trend for the Hang Seng Index, with support levels around 18,600/18,400. Additionally, mainland China will release fixed asset investment, unemployment rate, industrial production, and retail sales data for July at 10 o'clock, which is expected to provide insights into the recent performance of the "three engines" and add uncertainty to the market situation.
China Shipping (0598) primarily engages in freight forwarding, professional logistics, warehousing and terminal services within China, as well as logistics equipment leasing and other related services. The group's main operational activities are located within the territory of China.
In the first quarter of 2023, the group's operating revenue was CNY 22.361 billion, a year-on-year decrease of 24.56%. The decline was primarily due to a significant drop in sea and air freight rates compared to the same period last year, as well as weakening demand in the European and American markets, resulting in a decrease in the company's sea and air freight volumes. The net cash flow generated from operating activities increased by 92.12% compared to the previous year, mainly because the company continuously strengthened its management of working capital, significantly reducing the net cash outflow from operating activities compared to the same period last year, and maintaining a balance between cash inflows and outflows from operating activities.
The group's stock price has recently shown an upward trend, and there are signals of financial technology in its systems. The group is valued at a relatively lower level compared to its peers. If the valuation is based on a P/E ratio of 5, the target price for the group would be 3.1 yuan.
The author is a licensed individual of the Hong Kong Securities and Futures Commission and does not hold the aforementioned shares. The above article represents personal opinions.
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