Hong Kong stocks’ broad-based gain a sign bull run still has momentum: Oanda analyst
- The proportion of Hang Seng Index members trading above their 200-day moving average rose to 61 per cent in May, from 48 per cent in April and 38 per cent in March
The widening breadth of Hong Kong stocks’ rally in recent weeks suggests the bull run in Asia’s third-largest market has yet to run its course, according to a technical analyst.
The proportion of Hang Seng Index members trading above their 200-day moving average has been rising steadily since March, indicating the benchmark’s gain is buttressed by broad-based buying, said Kelvin Wong, an analyst at Oanda, who in February predicted that Hong Kong stocks would rise.
The ratio for the 82-member gauge rose to 61 per cent in May, compared with 48 per cent in April and 38 per cent in March, he said. That is “an indication of a firmer major uptrend phase”.
A greater number of benchmark constituents rising generally indicates a rally in more than just a handful of stocks. The 200-day moving average measures a stock’s price performance over the period and is considered a key long-term price strength indicator by traders and market analysts.
The call adds to the argument that the recent pullback in Hong Kong stocks may be temporary mainly because they are technically in the overbought zone and the overall trend remains intact.
The Hang Seng Index has dropped almost 6 per cent from this year’s high on May 20, after charging into a bull market following a 20 per cent gain from a low in January.