Market Uncertainty Pushes Hang Seng Index Below March 2020 Low

• One striking development overnight was the plunge in Chinese equities, with the Hang Seng Index falling below its March 2020 low.
• The surge in uncertainty combined with the downward revision in growth expectations and renewed crackdown fears have left China equities vulnerable in recent weeks.
• Hang Seng index is now down over 15% since its February high when it found resistance at 24,976.10 , which corresponds to the 61.8% Fibo retracement of the 21,139.30 – 31,183.40 range (2020/2021 low high).
• The current environment has ‘erased’ China officials’ ‘easing effort’ as the market uncertainty could continue to weigh on domestic and global risky assets in the near term.
• The strict ‘Zero-Covid’ policy has been weighing on equities in the past year, depriving China from reaching its ‘original’ 6% growth target.
• At its latest economic meeting, officials have set China growth target at 5.5% for 2022, its lowest level in more than three decades.
• Even though China hinted that it could start to look for a gradual ‘reopening’ of the economy, officials are clearly not in a hurry to change the Covid policy in the near term and therefore the deterioration in the Russia/Ukraine conflict could continue to impact risky assets.

Source: Bloomberg/MNI