Hong Kong Returns to Pre-COVID-19 Protests.
|Label||Position||Entry Price||Stop Loss||Take Profit|
A risk off sentiment is moving the Asian market, but this time is driven by Hong Kong protests instead of COVID-19 pandemic.
Thousands of protesters were back to the streets of Hong Kong on Sunday to oppose the Chinese government’s move to impose a national security law, which threatens the city’s autonomy.
On Friday, Australia, along with canada and uk issued a joint statement expressing their concern about China’s proposals for legislation on national security in Hong Kong.
The joint statement emphasized “a high degree of autonomy” for Hong Kong as agreed by China and the UK when China took back the former British colony in 1997.
The Chinese Embassy in Canada on Saturday expressed “strong opposition” against the joint statement and UK, Australia and Canada’s “gross interference” of Chinese domestic affairs.
the United States is to issue a report as early as next week, which if Hong Kong’s autonomy is not affirmed and could lose its trade privileges with the US. Hong Kong is not yet subject to the tariffs applied on china.
In addition, The US is taking measures that may lead to many Chinese stocks losing their listings in the US. According to Bloomberg, without the 140 listings, which account for $383 billion in market capitalization, the NASDAQ would go from being up 5% to being down almost 7%.
The Hang Seng index is down by 5.5% on the first hours after the Asian session opens. And we expect a further decline toward March lows at around 21600.00. as long as the protests continues and many countries around the world still worrying about the degree of autonomy in Hong Kong, along with more political and economic pressure is expected from the United States.
Inorder to take advantage of the situation we need to wait for a good optimal entry point which is expected to be at the breakout of previous trough which is the actual support at 22722.00.
The expected increasing momentum – pushed by more risk off and political tensions, let alone if any new coronavirus cases to appear – would help the downward move to find a follow-through.
The entry price is set at 22680.00, with a target of 21610.00, and a stop loss situated at 23439.00 where the upward retracement erases about two thirds of the actual decline.