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The Hang Seng index has suffered a harsh reversal in the past few weeks as demand for Chinese equities. It is nearing a correction zone after crashing by almost 10% from its highest level this year. It was trading at H$17,720, its lowest swing since May 2nd.
Xiaomi stock price implodes
The Hang Seng index has plunged recently as most constituent companies retreated. Notably, Xiaomi share price has moved into a bear market as it dropped by 205 from its highest point this year.
Xiaomi has dropped because, as I predicted, its entry into the electric vehicle industry will likely be more costly in the long term. While its vehicle has been highly popular, the company has retreated in line with other EV companies like Nio, XPeng, and Li Auto.
The most recent financial results showed that Xiaomi’s revenue jumped by 27% in the first quarter to RMB 75.5 billion while its profit fell by 1% to RMB 4.1 billion.
Other Hang Seng index constituents have also nosedived in the past few weeks. New World, Henderson Land, China Resources Land, Wharf Real Estate, and Lonfor Properties have all tumbled by over 12% in the past month.
This retreat happened as jitters about the Chinese real estate industry continued. While Beijing has unveiled a plan to save the industry, most analysts believe that the resources are not enough.
Some of the other top laggards in the past 30 days were companies like Li Ning, Xinyi Solar, Haidalao, Jd Health, and Li Auto, which have fallen by over 10%.
The only gainers in this period were the likes of BYD, China Unicom Hong Kong, and SMIC. BYD has soared after the company became one of the biggest players in the EV industry globally.
Hang Seng index forecast
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The daily chart shows that the Hang Seng index has been in a strong bearish trend in the past few weeks. It has plunged from a high of H$19,718 in May to below H$17,720. It has moved below the crucial support level at H$17,755, its lowest level on June 8th.
The stock has dropped below the 50-day and 25-day Exponential Moving Averages (EMA) while the MACD and the Relative Strength Index (RSI) has drifted downwards. Therefore, the stock will likely continue falling as sellers target the key support at H$17,000.
The post Hang Seng index nears correction as Xiaomi stock nosedives appeared first on Invezz
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