The Hang Seng Index in Hong Kong turned early losses into a 0.3% gain to 22,619 after China Mobile (CHL) offered good news with better-than-expected earnings. The index of Chinese companies rose 0.6% to 11,102.
The market was already in the grip of a month-and-a-half consolidation when poor Chinese economic statistics plus Increased tightening by China’s central bank drove the Hang Seng 535 points lower the first three trading days this week. A steep drop by Hong Kong properties Thursday due to bank mortgage rate increases seemed sure to extend losses until China Mobile’s good results helped the index regain its footing above the 100 -day moving average of 22,556.
But the worst may not be over, according to Dickie Wong, executive director of research at Kingston Securities. He told Equities that if the Hang Seng slips below the 10-day moving average, it could test 22,000 in the worst case.
Even defensive stocks like utilities, normally a safe haven in a downturn, have been weak lately due to profit-taking from earlier rises, Wong said. Asked if any sector or stock looked good in the short term, he replied, “Not really.” End