Market Commentary - For the week ending 23 September 2022

DXY hits high of 113.23, USDCNH hits high of 7.147. BOJ intervenes in FX market. HSI, DJIA and XAUUSD makes new 52-week low. Geopolitical uncertainty comes back to forefront with Russian mobilisation. Indian mogul Adani displaces Bezos as world’s second richest.  Hong Kong’s government announced on Friday that it would end hotel quarantine for inbound travelers, starting Sep. 26. HKMA lowers interest rate stress testing requirement for property mortgage lending from 3% to 2%. “There is a very high chance for Hong Kong to record a negative GDP growth for this year,” Financial Secretary Paul Chan told reporters.

Hang Seng Index closed at 17933, down 828 points or 4.24. It is now at a new 52-week low. It is also 42.5% off its top at 31183 last February. Its technical setup is associated with further losses. March ‘22 swing low at 18236 is now the level to watch. Be mindful of sharp reversal back above this level. It could trigger a short squeeze.

Some levels to keep in mind:

1. February ‘16 low at 18278.

2. October ‘11 low at 16170.

HSI weekly chart from 03 January 2022 to 23 September 2022 (Source: DLC.socgen.com)

Hang Seng Tech closed at 3590, down 269 points or 6.97% from the previous week. Watch for price action at March ‘22 swing low at 3463.

HSTech weekly chart from 03 January 2022 to 23 September 2022 (Source: DLC.socgen.com)

Dow Jones Industrial Average made a new 52-week low this week closing at 29590, down 1232 points or 4%. Nasdaq closed at 11311, down 550 points or 4.64%. Both indices had fallen below their entire array of moving averages and could be due for further losses. Fed fund futures indicate 27.1% probability of 50 basis point rate hike and 72.9% probability of 75 basis point hike by the next Fed meeting on 02 November 2022. Rates could reach as high as 5.5% by December 2023.

Shanghai Composite closed the week at 3088, down 38 points or 1.22%. Shenzhen Index closed 11006, down 255 points or 2.27%. Both are in downtrending setup and could continue to fall. It is speculated that major policies will be introduced only after China’s once-in-five-years Congress on 16 October. Therefore the market could be confined to technical drivers or single stock-related news. End-of-week price action indicates 3000 and 10800 the levels to watch for Shanghai Composite and Shenzhen Index respectively.

Economic data in coming week:

1. China PMI data on Friday 30 September 2022.

2. ECB Lagarde to speak on Monday 26 September 2022.

3. Fed Powell to speak on  Tuesday 27 September 2022.

4. Fed Powell to speak on Wednesday 28 September 2022.

5. Core PCE Price Index on Friday 30 September 2022.

Technical observations

ANTA Sport 2020.hk to continue downtrend, support at $80.

Note chart features:

1. ANTA Sports is trading below its entire array of moving average indicators. Previous 52-week low is $106.70 printed on 21 December 2021. This combination is associated with further downtrend.

2. Based on last swing highs in early July and mid-August this year, $100 is a resistance. Chart pattern based on swing highs and swing lows from May this year till date suggests a triangle lookalike, possibly a bearish continuation.

3. $79.90 is the previous 52-week high for the year 2019 printed on 08 November 2019. This could be a potential support to watch. Observation of price action this year especially swing lows in May and August this year appears to agree.

ANTA Sports 2020.hk daily chart from 23 September 2019 to 23 September 2022 (Source: DLC.socgen.com)

BYD 1211.hk confluence of potential supports below.

Note chart features:

1. BYD is trading below all its moving average indicators so this setup is associated with further losses. On the other hand it should be noted that from the year 2020 till date, BYD is still making higher highs and higher lows. Based on this kind of price action, there could be a segment of investors eagerly waiting for long signals.

2. $212 is a former 52-week high printed on 24 November 2020. Inspected swing low at mid-July 2021, swing low between April and early-May 2021 as well as price action over the past three weeks indicate that $212 was a higher that became support over multiple occasions.

3. Additionally trend line studies drawn from price channels as well as the approaching $200 could all contribute to a confluence of potential supports.

BYD 1211.hk weekly chart from 06 July 2020 to 23 September 2022 (Source: DLC.socgen.com)

Corresponding Daily Leverage Certificates (DLCs)

Investors looking to gain exposure to HSI and HK stocks with a short-term view can consider using the Daily Leverage Certificates (DLCs) listed on SGX. Tabled below are the 7x Long and Short DLCs on HSI and 5x Long and Short DLCs on HSTECH, ANTA, and BYD:

Source: DLC.socgen.com

Note: 4-character code e.g. CZMW refers to the SGX stock code of the DLC.

Long DLCs allow investors to generate leveraged gains when the underlying asset goes up. On the other hand, Short DLCs increase in value when the underlying asset goes down, allowing investors to achieve positive and leveraged gains during market downturn.  Conversely, investors will sustain leveraged losses when the underlying asset goes down for Long DLCs, or when the underlying asset goes up for Short DLCs.

[Newly Launched DLCs]

Launch of 5X Long & Short DLCs on Dow Jones Industrial Average Index

Daily Leverage Certificates (DLCs) tracking the Dow Jones Industrial Average Index (DJIA) have since commenced trading from 13 September 2022 with 5x leverage on both Long and Short directions. Note that the US indices DLCs can be trade during SGX market hours only when US markets are closed. SocGen will provide bid/offer quotes that are closely linked to the e-mini futures during SGX market hours.

Source: Societe Generale (DLC.socgen.com)

View the full list at https://dlc.socgen.com/en/underlying/quote-and-chart/code/DJI

Daily Leverage Certificates (DLCs) are financial products listed and traded on SGX Securities Market. DLCs enable investors to take a leveraged exposure to an Underlying Asset, such as an equity index or a single stock. Daily Leverage Certificates replicate the performance of an Underlying Asset versus its previous day closing level, with a fixed leverage factor. For example, if the underlying stock rises 1% verses its previous close, the respective 5x Long DLC will rise by 5% while the 5x Short DLC will fall by 5% and vice versa if the underlying stock falls 1%, before costs and fees are factored in.

Visit Societe Generale’s DLC Website here to see the full list of DLCs and learn more about the product features including the associated risks of trading the DLCs.

This advertisement has not been reviewed by the Monetary Authority of Singapore.

The views expressed under this article represent the personal and independent views of the author and do not constitute investment advice. The content of this article 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.