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HSI Stabilizes: A Comeback in Sight?
13 Jul
Summary
- Hang Seng Index shows signs of stabilization after underperformance.
- HSI experienced a sustained downtrend through H1 2026.
- Technical conditions are improving, with key support at 23,825.
The Hang Seng Index (HSI) began the second half of 2026 exhibiting early indications of stabilization. This followed a period of notable underperformance. Major US equity indices reached record highs through 2025 and 2026, while the HSI traded sideways, peaking near 28,000 in late January 2026 before entering a sustained downtrend.
Economic momentum and corporate earnings expectations contributed to weaker investor sentiment towards Hong Kong and mainland Chinese equities. The first quarter of 2026 was particularly challenging, with the HSI falling to around 24,100. While a modest rebound occurred in the second quarter, selling pressure intensified from May through June.
Technically, the HSI has shown weakness, remaining below major Simple Moving Average (SMA) levels since May 2026. Bearish crossovers of the 50-day, 100-day, and 200-day SMAs confirmed a deteriorating trend throughout the first half of the year.
More recently, technical conditions have improved. The July rebound has pushed the HSI above the 23.6 per cent Fibonacci retracement level near 23,825, establishing it as initial support. A decisive break above the 38.2 per cent Fibonacci level at 24,633 is needed to signal improving sentiment and potentially test the significant resistance zone between 25,150 and 25,300. However, the bearish alignment of moving averages suggests the recovery is in its early stages, requiring sustained buying interest.
