Commentaries & Webinars

Market Commentary - For the week ending 16 September 2022

USDCNH hits 7.0424 in intraweek trading. Headlines speculate that PBOC and BOJ could intervene in FX market if Dollar strengthens further. Biden’s biotech executive order deals blow to Chinese pharma.

Hang Seng Index closed at 18678, down 601 points or 3.1% for the week. This is a solid week close below 19000. HSI is now operating below its entire array of moving averages and is also below its previous 52-week low. This setup is associated with further losses. There does not appear to be any tried-and-tested support levels below. Round numbers like 19000, 18000 and so on are ideas but do not have consensus from other participants in the market until proven by price action.

Some levels to keep in mind:

1. March ‘22 swing low at 18236.

2. May ‘22 swing low at 19179.

3. February ‘16 low at 18278. HSI fell 36.1% over four quarters between 2015 and 2016 then.

4. October ‘11 low at 16170. HSI fell 35.3% over five quarters between 2010 and 2011 then.

We are in the seventh quarter of this current bear market and the HSI has fallen 39.8%  till date.

HSI weekly chart from 03 January 2022 to 16 September 2022  (Source: DLC.socgen.com)

Any past performance is not indicative of future performance

 

Hang Seng Tech 

closed at 3858, down 219 points or 5.4% from the previous week. In all aspects, HS Tech setup is no different from HSI. HSTech closed the week below 4000, a critical support on the weekly chart since March this year.

Levels to watch:

1. March ‘22 swing low at 3463.

2. May ‘22 swing low at 3463.

HSTech weekly chart from 03 January 2022 to 16 September 2022 (Source: DLC.socgen.com)

Any past performance is not indicative of future performance

 

Dow Jones Industrial Average closed the week at 30822, down 1329 points or 4.13%. Nasdaq closed at 11861, down 727 points or 5.77%. Both indices had fallen below their entire array of moving averages and could be due for further losses. On Tuesday 13 September ‘22 both indices were dealt a major blow by an above forecast month-on-month CPI reading. DJI closed down -1276 points over the previous session close. Positive CPI reading dashes the market’s hope that FOMC could soon pivot to a less hawkish if not outright dovish stance on rates.

Shanghai Composite closed at 3126, down 136 points or 4.16%. Shenzhen Index closed 11261, down 616 points or 5.19%. This is the second-worst weekly performance for Shenzhen Index year-to-date and the third-worst for Shanghai Composite. Internet chatter suggests that major policies would not be introduced until after China’s once-in-five year congress beginning 16 October.

Economic data in coming week:

1. ECB Lagarde speaking Wednesday 21 September 2022.

2. FOMC Fed Funds Rate and press conference on Thursday 22 September 2022.

3. Fed Powell to speak on Saturday 24 September 2022.

 

Technical observations

Wuxi Biologics 2269.hk dealt a punishing blow by Biden’s executive order.

Note chart features:

1. US President Biden signed an executive order on 12 September 2022 “Executive Order on Advancing Biotechnology and Biomanufacturing Innovation for a Sustainable, Safe, and Secure American Bioeconomy”. In its own words, the order “maintains United States technological leadership and economic competitiveness.”

2. Wuxi could be a victim of this order. Pharma companies were ordered to be less reliant on Chinese enterprises.

3. Last week we observed that Wuxi was in a rising channel and supported by bullish moving averages which could turn out favourable. This outcome is now completely dashed as Wuxi fell below these supports.

4.  Despite the big move that happened on Monday 13 September, selling volume on following days are still outsized. There could be some retracement but Wuxi’s setup is associated with further losses.

Wuxi Biologics 2269.hk daily chart from 02 July 2021 to 16 September 2022 (Source: DLC.socgen.com)

Any past performance is not indicative of future performance

 

Li Ning 2331.hk meets resistance, moves lower.

Note chart features:

1. Li Ning was resisted between  $72.50 – 73.50. We can see this from price action at the late-June to July swing high and at the August swing high. After multiple weeks attempting to move higher, Li Ning is now weakening. Moving down, it also closed below another swing high/resistance between $66 – 67.

2. Based on this week’s end-of-week close, the stock could be supported at the 100 Day SMA(red). There was precedent for this, see left black arrow. If Li Ning could build support here, it could make another attempt to break higher. If the stock falls below, then the entire array of moving averages turn into potential resistance.

3. Next support could come from round numbers. These however have to be backed by observation of price action. A potential support that has some credibility could be $52 – 53. See March and May 2022 swing lows.

Li Ning 2331.hk weekly chart from 04 January 2021 to 16 September 2022 (Source: DLC.socgen.com)

Any past performance is not indicative of future performance

SG DLCs

Underlying Index/Stock

Underlying Chg (%)1

Long DLC (Bid Change%2)

Short DLC (Bid Change%2)

Hang Seng Index (HSI) +0.54% CZHW (+1.81%) CXQW (0.00%)
Li Ning Co Ltd (2331.HK) +1.57% DNKW (+8.91%)

 

Brought to you by SG DLC Team

This advertisement has not been reviewed by the Monetary Authority of Singapore. This advertisement is distributed by Société Générale, Singapore Branch. This advertisement does not form part of any offer or invitation to buy or sell any daily leverage certificates (the “DLCs”), and nothing herein should be considered as financial advice or recommendation. The price may rise and fall in value rapidly and holders may lose all of their investment. Any past performance is not indicative of future performance. Investments in DLCs carry significant risks, please see dlc.socgen.com for further information and relevant risks. The DLCs are for specified investment products (SIP) qualified investors only.

Full Disclaimer - here