The Hang Seng Index continues to lag behind its global peers as some of its biggest constituent companies tumble. It dropped to 23,963 on Thursday and is hovering at its lowest level since July 8. It has slumped by over 14% from its highest point this year, even as the S&P 500 Index has jumped to a record high.
Top Hong Kong stocks have retreated this year
A closer look at the Hang Seng Index shows that some of the biggest companies have dropped substantially in the last 30 days. Sands China stock has tumbled by 20% in this period, mirroring the performance of other casino stocks with an exposure to Macau.
Laopu Gold stock is down by 18% as gold has continued falling. Gold has remained under pressure in the past few months as US government bond yields have surged to the highest levels in years. The closely watched ten-year yield has jumped to the highest point since 2002, and the rally may continue in the foreseeable future.
Haidilao International has also slumped by 18% as global restaurant companies like McDonald’s and Starbucks have remained under pressure. These companies are seeing an increase in costs as food and energy prices jump.
Semiconductor Manufacturing (SMIC) stock has been in a downward trend, falling by 15% in the last 30 days and by 31% in the last three months. This weakness has accelerated even as the artificial intelligence boom has continued.
BYD and Li Auto have slumped as concerns about China’s EV sector have remained this year. In a recent statement, BYD said that competition in the sector was surging at a time when the costs of doing business remained high. Other top Chinese EV stocks like Nio and XPeng have also been in a strong freefall.
Meituan stock has continued its strong freefall because of the rising competition in the food delivery industry. Precisely, it is competing with companies like Alibaba and JD.com that have better balance sheet.
Xiaomi, often seen as China’s version of Apple, has also underperformed the market this year because of rising memory costs. These costs have jumped as the biggest suppliers in the industry have put more emphasis on their AI data center businesses. As a result, its margins have been affected. Its EV business is also facing the challenges that companies like BYD and Li Auto are going through.
On the other hand, some top names have held relatively steady in this period. Wuxi Biologics stock has jumped by 15%, while China Overseas Land, China Resources Power, and Lenovo Group have risen by over 5%.
Hang Seng Index technical analysis
Hang Seng Index chart | Source: TradingView
The daily chart shows that the Hang Seng Index has been in a freefall in the past few months. As a result, it has remained below the 50-day and 100-day Exponential Moving Averages (EMA), a sign that the downward trend remains.
The index also remains below the descending trendline that links the highest swings in February, May, August, and September this year. The Average Directional Index (ADX) has risen to 20.75, its highest point since August 12.
Therefore, the path of the least resistance for the index is downwards, with the next key target to watch being at 23,000.
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