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Hangseng Leadership...
- Thread starter ASusilovic
- Start date
Quote from cokezero:
HSI may "lead" the US market sometimes because of its large foreign capital presence. Sometimes I see significant futures and cash divergence in the afternoon and more often than not it has some follow thru in the US market usually because of some surprised figures. It makes sense because some large firms might get the data ahead and the liquidity is better in HSI at the time than in the US overnight market. I don't know if we could make money off this observation though. Never tried it and the leading relationship could be just in my head.
My observation and conclusions also.
Quote from Petsamo:
ASusilovic, is the Hang Seng in bear market mode? The index just keeps dropping.
....
Dec. 17 (Bloomberg) -- Hong Kongâs central bank said the city may face âsharp correctionsâ in asset prices should fund flows reverse, adding to concerns voiced by Japan, China and South Korea on the dangers of speculative capital.
A rally in the stock market was fueled by an influx of capital as investorsâ risk appetite gained and they bet on an improving outlook for Chinaâs economy, the Hong Kong Monetary Authority said in a quarterly report yesterday. Outflows may bring âvolatilities in the real economy,â the HKMA said.
Housing prices in Hong Kong have gained for 10 months, while the benchmark Hang Seng Index has surged 50 percent this year. Financial officials in Japan and China, Asiaâs two largest economies, warned last month that the Federal Reserveâs interest rate policy risks spurring speculative capital that may inflate asset prices and derail an economic recovery.
âItâs highly probable that the asset markets would show fluctuations once the fund flows reverse if the U.S. raises interest rates,â Peng Wensheng, a Hong Kong-based economist with Barclays Capital, said. âThe risk isnât restricted to Hong Kong, but extends to emerging markets, especially in Asia.â
The Hang Seng Index fell 0.2 percent as of 10:24 a.m. local time, with New World Development Co., a developer controlled by billionaire Cheng Yu-tung, dropping 1.6 percent.
Three reasons why the HangSeng is weak:
1. HKD is still pegged to the USD - as the USD strengthens, HKMA is under less pressure to print money to maintain the peg. (Weak dollar is very inflationary in HK.)
2. HSBC is ~14% of the HangSeng Index, and is deemed very exposed to potential Dubai default.
3. Chinese companies are listing on the HK Exchange like lemmings, innundating the market with supply. Note esp. China Pacific Insurance will begin trading its US$3-bil IPO on Dec 23 - should contribute to significan weakness that day.
1. HKD is still pegged to the USD - as the USD strengthens, HKMA is under less pressure to print money to maintain the peg. (Weak dollar is very inflationary in HK.)
2. HSBC is ~14% of the HangSeng Index, and is deemed very exposed to potential Dubai default.
3. Chinese companies are listing on the HK Exchange like lemmings, innundating the market with supply. Note esp. China Pacific Insurance will begin trading its US$3-bil IPO on Dec 23 - should contribute to significan weakness that day.
Quote from Petsamo:
Thanks! You have a buy point?
The definiton of a correction is a downward move of 10 % from the highs. Hangseng is more than only in a correction mode. I suppose some large players have cashed in as they already foresee what will come from China's credit oversupply :
the next credit bubble to burst.