Asian stock rallies come to a halt as investors take profit
The Hang Seng Index and Straits Times Index both fell 1.6% and 1.13% respectively on Friday, as investors sought to consolidate profits.
- Hong Kong’s Hang Seng Index closed 1.6% lower as investors sold off their shares on Friday triggered by ‘overbought’ signals
- A worsening Covid-19 situation in China and overseas also motivated the profit-taking
- Meanwhile, Singapore’s Straits Times Index also closed 1.13% lower after having breached the 3,000 mark a day before
- Looking to trade the Hang Seng Index or Straits Times Index? Open an IG account today
Hang Seng Index: ↓1.6%
Hong Kong blue chip equity barometer Hang Seng Index (HSI) closed 1.6% lower at 29,450 on Friday (22 January 2021), putting an abrupt end to its best yearly start since 1985.
The benchmark has enjoyed a 10% rally in the last three weeks alone, as interest from Mainland Chinese traders surged over concerns of a recent US ban on Chinese securities.
Chinese investors have already transacted nearly US$29 billion worth of Hong Kong stocks so far this year, almost a third of all purchases made in the whole of 2020.
The HSI eventually breached the 30,000 mark on Thursday (21 January), its highest level since May 2019.
Shares, however, retreated on Friday as ‘overbought’ signals a day prior prompted investors to sell down for profit consolidation. A worsening Covid-19 situation both in China and overseas also negatively impacted sentiments.
‘The stocks have risen quite a lot recently, when it broke 30,000 points and investors reached their short-term goals, they tend to take profit at a high level,’ said Linus Yip, chief strategist at First Shanghai Securities, told South China Morning Post.
‘Although funds usually have long-term arrangement (in their new portfolio), the market still will have consolidation when they stopped buying (at a high price).’
Top losers of the day included: CNOOC (-5.57%), Xiaomi (-3.72%) and Alibaba (-3.09%).
Straits Times Index: ↓1.13%
Meanwhile, Singapore’s large cap benchmark Straits Times Index also slipped 1.13% to finish the day at 2,983.09, driven largely by property drops.
City Developments saw the biggest decline on the day, falling 2.2%. Other significant property stock losses included: CapitaLand (-1.45%), Mapletree Commercial Trust (-1.8%) and UOL (-1.3%).
Elsewhere, Singapore Airlines also experienced major sell-offs, descending 2.08% to conclude the trading week.
On Thursday (21 January), the STI Index breached the 3,000 level, as global trading sentiments peaked on the inauguration of new US President Joe Biden.
The index had closed at 3,017.15 points, up 18.38 points, or 0.61% on the day.
How to trade indices with IG
Are you feeling bullish or bearish on the Hang Seng Index or Straits Times Index?
Either way you can buy (long) or sell (short) the asset using derivatives like CFDs offered on IG's industry-leading trading platform in a few easy steps: q
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk. Please see important Research Disclaimer.
Please also note that the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.
Explore the markets with our free course
Discover the range of markets you can spread bet on - and learn how they work - with IG Academy's online course.
Turn knowledge into success
Practice makes perfect. Take what you’ve learned in this index strategy article, and try it out risk-free in your demo account.
Ready to trade indices?
Put the lessons in this article to use in a live account. Upgrading is quick and simple.
- Get fixed spreads from 1 point on FTSE 100 and Germany 40
- Protect your capital with risk management tools
- Trade more 24-hour markets than any other provider – 26 in total
Inspired to trade?
Put the knowledge you’ve gained from this article into practice. Log in to your account now.
Live prices on most popular markets
- Forex
- Shares
- Indices
See more forex live prices
See more shares live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.
See more indices live prices
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 20 mins.
