Hang Seng Index struggled on China’s conservative growth target
Hang Seng index packed the first trading session after China’s meeting of the year with a marginal 0.04% growth, so, why 5% growth target is a disappointment to the investors?
Asian stock market mostly moved higher to kick off a new week after a strong session on Wall Street, Japan, South Korea and Taiwan markets all jumped by more than 1%.
However, the performance in the China and Hong Kong market was mixed as investors digested China’s softer-than-expected growth targets and waited for more information from the week-long National People’s Congress (NPC) meeting.
Hang Seng index packed the first day after the NPC meeting with a marginal 0.04% growth, while Hang Seng China Index and Hang Seng Tech index were closed in the red.
Hang Seng Index: Why 5% growth target is a disappointment?
China announced a 5% growth target for 2023 on the first day of the NPC meeting, which is believed to be the most crucial top-tier meeting of the year.
To the market’s surprise, the 5% target is not only below market expectations of 5.5%, but also lower than the average post-pandemic economic growth for the top ten economies of the world. In 2021, the US economy recovered with a 5.7% annual GDP growth, and UK and India delivered 6.7% and 9%, respectively. China also recorded an 8% annual GDP growth after the first wave of the pandemic.
Even though China missed its growth target by a wide margin last year , global investors have moved on and expect China could be the saver again in the cloudy 2023. Nevertheless, this new disappointment has dosed this wishful prospect, as China’s GDP will remain more than 2% below its pre-pandemic level even if this year’s growth target can be met. Moreover, it seems too optimistic now that Chinese policymakers will provide additional stimulus to restore the economy after a three-full-years server damage.
Hang Seng Technical Analysis
Regarding technical analysis, after a strong breakout last week following China’s better-than-anticipated PMI data, Hang Seng Index is now hovering above the 20-day MA around 20577. If this ceiling can be convincingly breached to the upside, buyers could look forward to the next celebration point on 21000, followed by a 50-day MA.
On the flip side, if bears regain control and trigger a meaningful pullback, 100-day MA will be a key support to keep an eye on, and the risk of retesting the 20000 psychological level will increase.
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