ONLINE FOREX BROKER
2022-12-15 • Updated
Pandemic stimulus boosted everything from stocks to crypto and property worldwide in 2021. Unfortunately, China went the other way as Beijing officials took action to deflate bubbles.
The result is one of the most extreme divergences between major financial markets in recent history. This year’s sell-off in the HK50 index means the gauge lags global peers by 37 percentage points, the most significant gap since 1998.
Investors remain vulnerable to the Communist Party’s unpredictable policymaking. Hopes that Beijing was close to the end of a crackdown on the tech sector were dashed when Didi Global Inc. was asked to delist from the US.
The growing divide between Beijing and Washington also threatens company profits. On December 15, Chinese biotech stocks plunged after the Financial Times said the US Commerce Department plans to ban some companies in the industry from using American technology.
History teaches us that these are usually the periods that offer the most attractive opportunities. Wall Street analysts and experts predict that the Chinese index can make up to 40% profit in 2022, especially as Beijing shifts to monetary policy easing.
The global market expects policymakers to support the economy in 2022 to prevent a hard landing. That would mean easing off on a regulatory pressure that has depressed the valuations of Chinese assets. The People’s Bank of China reinforced that consensus this month when it freed up liquidity for lenders. Moreover, on Monday, December 20, the government decreased the key rate from 3.85% to 3.8%.
Key comments:
Goldman Sachs
"We believe Chinese stocks will have a better year in 2022 as the market recovers from a major correction and transitions into a 'hope' phase, where P/E expansion typically trumps weak fundamental growth and drives strong equity gains."
Morgan Stanley
"MSCI China has had its worst ever relative performance drawdown vs. broad emerging markets in 2021...despite such a record underperforming year, we still see some lingering risks skewed towards higher volatility or more downside in the near term. This makes us believe that now is not yet the right time to go bullish at a broad index level."
HSBC
"We think markets have been overzealous in selling Chinese stock... most funds are underweight and as the focus returns to growth in China, we think this market will roar back."
HK50 weekly chart
HK50 is trading above the global trendline on the weekly chart.
Monthly RSI has found its support at the level of 39.50.
We expect the price to consolidate between 23 000 and 24 000 in the first quarter of 2022. After that, the Chinese index will begin its way to the top with targets at 26 000 and 29 000.
The e-commerce giant has recently faced a lot of pressure, starting from global uncertainty in China amid lockdowns and geopolitics. The company has been added to the US SEC (Securities and Exchange Commission) delisting queue. Finally, there’s an earnings report coming on August 4. Let’s discuss everything and prepare for the next move.
China’s stock market performed well last week amid weakening lockdown measures. Traders are becoming bullish and greedy. Should we follow the crowd and buy HK50?
There are several amazing trading opportunities on the stock market. Read the article and catch them all!
Let's dive into the latest developments shaping the global economic landscape. Good news first: the threat of an unprecedented US debt crisis has receded, as US lawmakers passed a bill to raise the debt ceiling and avoid a catastrophic default. Phew! But don't pop the champagne just yet, because storm clouds are still looming. High inflation, rising interest rates, and sluggish growth are challenges that have yet to disappear.
Thanks to the incredible advancements in horizontal drilling and fracking technology, the United States has experienced a mind-blowing shale revolution. They've become the heavyweight champion of crude oil production, leaving Saudi Arabia and Russia in the dust. They even turned the tables and became net exporters of refined petroleum products in 2011.
Let's dive into the world of gold. Currently, the price of gold, represented by XAUUSD, is stuck in indecision, hovering around the $1,975 mark. The market is anxiously awaiting two important factors: the release of the Federal Reserve's meeting minutes and the extension of the US debt ceiling.
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