Hang Seng Index News: Forecast Tests 25,000 as Tech Weakness Hits Sentiment

Hang Seng Index Under Renewed Selling Pressure — Will It Hold Above 25,000?

On Wednesday, August 20, the FOMC Meeting Minutes highlighted Fed worries ahead of Fed Chair Powell’s looming speech at the Jackson Hole Symposium. By Thursday, August 21, the Hang Seng Index reversed gains from the previous session. Disappointing corporate earnings and cellphone shipment reports added to the negative sentiment, overshadowing hopes of Beijing achieving its 5% 2025 GDP growth target.

This week’s drivers include Fed comments from Jackson Hole, corporate earnings, and any new policy support from Beijing.

Hang Seng Index and Mainland China Equity Markets Diverge

The Hang Seng Index declined 0.14% to 25,131 in morning trading. By contrast, Mainland China’s equity markets extended their gains from Wednesday. The CSI 300 and the Shanghai Composite Index climbed 0.71% and 0.35%, respectively.

Beijing’s policy support pledges resonated, lifting demand for Mainland-listed stocks. This week, China’s premier Li Qiang pledged to stabilize the labor market, tackle housing market strains, and bolster spending.

Overnight, US markets were mixed for the second session. On Wednesday (August 20), the Dow gained 0.04%, while the Nasdaq Composite Index and the S&P 500 fell 0.67% and 0.24%, respectively, setting the tone for Asia’s session.

Tech Stocks Stumble as Corporate Earnings Disappoint

Tech giant Baidu (9888) slid 2.46% after reporting a larger-than-expected drop in Q2 revenue. Revenue fell 4%, missing expectations for a 0.3% rise. Cellphone shipment figures also disappointed, reportedly falling 9.3% year-to-date (YTD) in June. Shipments of foreign-branded cellphones tumbled 31.3% YTD.

Weaker consumption trends could undermine Beijing’s efforts to boost spending and achieve its 5% GDP growth target. The absence of effective government measures to bolster consumption could weigh on investor sentiment.

Brian Tycangco, editor at Stansberry Research, remarked:

“But a bigger concern is the near double-digit drop in handset sales in China. Not a good sign for consumption in the world’s largest smartphone market.”

Consumption concerns weighed on electric vehicle (EV) shares. Li Auto (2015) dropped 1.41%, with BYD (1211) and Geely Automobile (0175) also posting losses.

Retail sales rose 3.7% year-on-year in July, down from 4.8% in June, signaling a weakening demand backdrop.

The near-term outlook for the Index remains highly event-driven. Downside risks persist unless Beijing acts decisively or Powell strengthens rate cut expectations.

Technical Setup: Hang Seng Index Rebound Hinges on Powell and Beijing

Despite recent selling pressure, the Hang Seng Index remains above key technical levels, maintaining a cautiously bullish bias. The outlook depends on upcoming catalysts.

Hang Seng Index: Key Scenarios to Watch

Bullish Scenario: Dovish Fed rhetoric, fresh policy support from Beijing, positive earnings, or a US-China trade deal. These factors could drive the Hang Seng Index toward its 2025 high of 25,767.

Bearish Scenario: A hawkish Fed Chair Powell speech, the absence of fresh stimulus, weak earnings, or rising US-China trade tensions. These factors may drag the Index below 25,000, exposing the 50-day Exponential Moving Average (EMA).

Hang Seng Forecast: Can the Index Join Its Mainland Peers?

The Hang Seng Index has fallen back from its year-to-date peak of 25,767. However, a decisive stimulus package could be the next key catalyst, potentially bringing 26,000 into play.

A higher national unemployment rate and surging youth unemployment could impact fragile Chinese consumer confidence. Weakening sentiment may dampen domestic consumption. However, introducing incentives for firms to higher graduates and lower interest rates are potential support measures. Beijing’s stance on stimulus, alongside Powell’s policy stance, will be crucial for market stability.

Will Powell or Beijing deliver the lifeline the Hang Seng needs? The next 48 hours could prove critical. Follow our live coverage and consult our economic calendar.