Hang Seng Index Forecast: Can PMI Data Break the 24,000 Resistance Barrier?

Tech Slump Offsets Moody’s Credit Outlook Upgrade

Not even a Moody’s upgrade could lift Hong Kong stocks. The Hang Seng Index declined in morning trading on Wednesday, May 28. The pullback came despite Moody’s Ratings revising Hong Kong SAR’s credit outlook from Negative to Stable, affirming its AA3 rating.

Losses in tech and EV stocks overshadowed gains in the real estate sector as trade tensions simmered. Market focus remains fixed on upcoming Chinese economic data, including crucial PMI figures and any policy signals from Beijing. Key data, trade developments and policy moves could dictate whether the index reclaims the 24,000 mark or drops to 22,000.

Hong Kong Stocks Diverge from US Market Rally

US markets soared on May 27, with Nasdaq Composite Index surging 2.47% following President Trump’s delay to EU tariffs. However, Hong Kong markets failed to mirror Wall Street’s gains. The Hang Seng Index dropped 0.43% to 23,282, weighed by the absence of US-China trade talks. Mainland indices also struggled for direction, with the CSI 300 flat and the Shanghai Composite Index edging 0.04% lower.

Tech and EV Stocks Drag on Market Performance

JD.com (09618) remained under pressure, falling 1.12% after Meituan CEO Wang Xing’s comments from the previous session triggered concerns over increasing competition and margin pressure. Despite Xiaomi (01810) posting record Q1 revenue and profits, tech giants Alibaba (09988) and Baidu (09888) also posted losses.

The Auto sector faced heavier selling pressure. BYD (01211) lost 1.82%, while Li Auto (02015) and Geely Automobile Holdings (00175) fell 1.16% and 1%, respectively. Although additional stimulus from Beijing could boost domestic demand, near-term uncertainties stemming from trade friction impacted share prices.

Reports of Japan proposing to purchase billions of dollars worth of US semiconductor products from the US further pressured the tech and EV sectors.

Brian Tycangco, editor at Stansberry Research, remarked:

“I believe China wouldn’t mind buying a trillion yen worth of chips from the US to even out the deficit. But the problem is that Washington won’t sell them to China.”

Moody’s Affirms Credit Rating, Upgrades Outlook

Moody’s revised Hong Kong SAR’s outlook to Stable, citing confidence in the SAR’s credit resilience to a period of global trade tensions and slowing trade growth. However, risks persist. On May 26, Moody’s reaffirmed a negative outlook for China’s sovereign credit rating, highlighting export sensitivity and weak domestic consumption as key vulnerabilities.

Key Levels to Watch: 23,000 Support or 24,000 Breakout

The Hang Seng Index continues trading within a tight range. A close below 23,000 could signal a bearish breakdown, potentially targeting the 50-day Exponential Moving Average (EMA) and the psychological 22,000 level.

However, if China’s NBS private sector PMIs (due May 31) show improved momentum, especially in employment, new orders, and prices, the index could target 24,000, bringing the March high of 24,847 into sight. Progress in US-China trade talks and fresh Beijing stimulus may accelerate a move toward the March high.

Hang Seng Technical Outlook

• Resistance: 24,000, then 24,874.
• Support: 23,000, 50-day EMA at 22,719, then 22,000.
• Bias: Neutral-to-Bullish short-term, contingent on data, trade, and stimulus.

Forecast Summary

The Hang Seng continues struggling for direction, constrained by the absence of trade talks and the lack of fresh stimulus. Upbeat economic data or stimulus pledges could trigger a breakout. Until then, cautious sentiment and geopolitical uncertainty will likely cap gains.

For real-time updates on US-China trade talks, global stimulus efforts, and central bank signals, follow our live coverage and consult our economic calendar.