Commentaries & Webinars

Market Commentary - For the week ending 30 September 2022

Markets continue to be driven by geopolitics. On center stage, sabotage of Nordstream 1 and 2 as well as alleged nuclear threat from Russia.

- BOJ intervention to strengthen Yen did not see follow through as the USDJPY is now back within 1% of high.

- DXY hits 114.78.

- USDCNH hits 7.267.

- GBPUSD flash crashed on Monday 26 September 2022 morning, hitting a low of 1.0354, making a remarkable turnaround to turn positive for the week.

- PBOC to impose a 20% risk reserve requirement for banks buying foreign currency forward contracts.

- US Treasury 10 year yields hit an intraweek high of 4.02%.

 

Hang Seng Index makes new 52-week low, closes week at 17223, down 710 points or 3.96%.  At this moment there are few meaningless levels if any to look for potential support. This is the worst market in eleven years. Next worse performance was 2011 when the HSI printed a low of 16170 in October that year.

HSI weekly chart from 03 January 2022 to 30 September 2022 (Source: DLC.socgen.com)

 

Hang Seng Tech made a new 52-week low, closing the week 3450, down 140 points or 3.89%. Previous 52-week low at 3463 printed back in the middle of March this year is the level to watch. HSTech is now trading below all its averages so this is a setup associated with further losses. A short squeeze of 3463 however could send bears covering their shorts leading to a temporary bottom. Moving averages overhead continue to assert resistance.

HSTech weekly chart from 03 January 2022 to 30 September 2022 (Source: DLC.socgen.com)

 

Dow Jones Industrial Average made a new 52-week low this week closing at 28726, down 865 points or 2.92%. Nasdaq closed at 10971, down 340 points or 3.01%. Both indices had fallen below their entire array of moving averages and could be due for further losses. 

Fed funds futures on rate hike probability by next Fed meeting on 02 November as at last DLC commentary on 23 Sep:
●    27.1% probability of 50 basis point rate hike | 72.9% probability of 75 basis point hike
Fed funds futures on rate hike probability by next Fed meeting on 02 November at this week’s reading:
●    46.8% probability of 50 basis points rate hike | 53.2% probability of 75 basis point hike
This is a decline in hike expectations. Futures last week indicated that rates could reach as high as 5.5% by December 2023. The same reading for this commentary now places that rate at 5%. DJIA is now perched on 2019 high. The progress over the past three years that was lost is now just over 8200 points or 22%.

Shanghai Composite closed the week at 3024, down 64 points or 2.07%. Shenzhen Index closed 10779, down 228 points or 2.07%. PBOC is likely watching the USDCNH at the 7.20 level. The central bank is likely managing a slightly weaker RMB to support exports but not weak enough to trigger capital flight. Next week is Golden Week in China. Shanghai and Shenzhen Exchange will be closed from 03 to 07 October 2022. Hong Kong Exchange will be closed on Tuesday 04 October 2022 to celebrate the Double Ninth or Chongyang Festival.

Economic data in coming week:
1. ISM Manufacturing PMI on Monday 03 October 2022.
2. JOLTS Job Openings on Tuesday 04 October 2022.
3. OPEC meetings on Wednesday 05 October 2022; ISM Services PMI on the same day.
4. Non-farm Payroll on Friday 07 October 2022.
5. Core PCE Price Index on Friday 30 September 2022.
 

Other news:
1. AIA, AAC Tech, CK Asset, CNOOC, Greatwall Motor, Hysan Dev., Kingdee Intl., Kingsoft, Sinopec Corp., Stanchart, Tencent, Xiaomi buys back shares.
2. CK Asset down 10.52% for the week, announces asset disposal.
3. Sands China, Galaxy Entertainment soars on news that China will resume e-visa and tour groups for mainland travellers.
4. Xpeng hit a new 52-week low on record volume for the week.
5. Meituan and Alibaba bucks trend with positive week.
 

Technical observations

CK Asset 1113.hk terminates trend, drops 10.5% on high volume.

Note chart features:
1. Based on the trendline, it is likely CK Asset’s previous one-year uptrend terminated at the end of August 2022. Price action throughout September could be seen as a distribution pattern. Moving averages presented several ‘death crosses’ during this time which confirms termination of uptrend and transition to a sideway movement or downtrend.
2. Price is trading below its entire array of moving averages. This setup is associated with further losses.
3. Prices dropped 10.5% this week on high volume. Such a combination should be treated with caution.
4. Company announced on 28 September that it is selling a residential project known as ‘21 Borrett Road at Mid-Levels’ to a Singapore based fund. It is uncertain whether this asset disposal contributed to the high volume sell down this week as the value of this transaction equals 12% of the group’s market capitalization.
5. Previous swing lows (marked with horizontal lines in the chart) could be used as reference for future support if any.

CK Asset 1113.hk daily chart from 02 July 2021 to 30 September 2022 (Source: DLC.socgen.com)

 

Galaxy Entertainment 27.hk gaps up on Macau travel plans.

Note chart features: 
1. Galaxy is trading inside a sideway range from low of around $38 to high of $50. This sideway range can be traced back to September 2021. 
2. Over the last weekend, it was reported that Macau Chief Executive Ho Iat Seng announced that Mainland China will reinstate e-visas and tour groups to boost the economy. This plan is likely to kick off in November and will involve visitors from nearby Guangdong, Zhejiang, Jiangsu, Fujian and Shanghai. 
3. Following the announcement, Galaxy gapped up but spent the following days retracing. There was an increase in trading volume. Price could close the gap with further retracement or continue sideways to build a base. For now it is difficult to tell when a new trend will start. On the other hand, price is on the high side of this range which late entrants have to factor in when considering entry point.
4. It is worthwhile to note that Hong Kong announced last week that the territory is opening up. Macau also started accepting foreign visitors from 41 countries on 01 September. 

Galaxy Entertainment 27.hk daily chart from 02 July 2021 to 30 September 2022 (Source: DLC.socgen.com)

 

[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.

DLC Name

Stock Code

Type

Leverage

Issue Price (S$)

Listing Date

Expiry Date

DJIA 5xLongSG250911

CUJW

Long

5x

1.20

2022-09-13

2025-09-11

DJIA 5xShortSG250911

CVFW

Short

-5x

1.20

2022-09-13

2025-09-11

DJIA 5xLongSG250911A

CWIW

Long

5x

0.40

2022-09-13

2025-09-11

DJIA 5xShortSG250911A

CUMW

Short

-5x

0.40

2022-09-13

2025-09-11

Source: Societe Generale (DLC.socgen.com)

 

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%)
CK Asset Holdings Ltd (1113.HK) -0.59% DJHW (-1.21%) DIBW (+5.38%)
Galaxy Ent. (0027.HK) +0.46% DNJW (+3.56%) DONW (0.00%)

 

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