The Hang Seng Index moved sideways as investors watched the ongoing trade negotiations between the United States and China. It was trading at H$24,800 on Tuesday, marginally higher than this week’s low of $24,680. 

Hang Seng Index technical analysis

The daily chart shows that the Hang Seng Index has been in a strong uptrend in the past few months. It jumped from a low of $18,650 in January to the current $24,800, a 32% jump.

The index has remained above the 50-day Exponential Moving Average (EMA), a sign that bulls remain in control. It is also hovering at the crucial level at $24,870, a significant level since it was the highest swing on March 19th this year.

The Hang Seng  Index has formed an ascending channel and is now slightly above the lower side. Therefore, the most likely scenario is where the index rebound and possibly hits the resistance level at $25,000. A move above that level will signal further gains, potentially reaching the year-to-date high of $25,705. 

Hang Seng Index chart | Source: TradingView

China and US talks

The main catalyst for the Hang Seng Index is the China-US trade talks that will reduce the ongoing trade war. Most market participants hope that the two sides will reach an agreement soon. 

A key issue has been demand by the United States for China to halt Russian oil and gas purchases over the ongoing war in Ukraine.

Still, based on the recent trade agreements between the US and other countries, there are signs that the two will reach a deal soon. Such a deal will likely see China make more purchases of US goods, while leaving a 15% tariff in place.

The Hang Seng Index is widely seen as a proxy for China’s equity market. However, a close look at its constituents shows that many of them, including big names like Tencent, ICBC, China Construction Bank, and HSBC have no major operations in the United States. 

Top gainers and laggards in the Hang Seng Index

Biotech companies are some of the best-performing stocks in the Hang Seng Index this year. Sino Biopharmaceutical’s stock price has jumped by 130% this year. CSPC and Hansoh Pharmaceuticals have jumped by 108% and 106$, respectively. 

These biotech companies have surged this year, ending a four-year slump as investors cheered some major deals on Chinese biotech companies. For example, Pfizer reached a record $1.25 billion to license a cancer drug from 3SBio. Bristol-Myers Squibb then reached a deal to pay $11.5 billion for a drug that it licensed from China’s Biotheus. In a note, an analyst said:

“China biotech is no longer just an emerging story — unlike 10 years ago — it is now a disruptive force reshaping global drug innovation. The science is real, the economics are compelling, and the pipeline is starting to deliver.”

The other notable top gainers in the Hang Seng Index are Chow Tai Fook Jewellery, Kuaishou Technology, Wuxi AppTech, Wuxi Biologics, JD Health, and SMIC. All these stocks have jumped by over 80% this year. 

On the other hand, the top laggards in the Hang Seng Index are New Oriental, BYD Electronic, Meituan, Sinopharm Group, and Haier Smart Home. All these stocks have crashed by over 10% this year.

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