(Bloomberg) — China’s stock indexes are nearing key technical levels amid a relentless selloff, and a fall below the thresholds could portend further losses to come.
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The downward trend comes as global investors remain pessimistic about the outlook for China, whose economy is showing a fragile recovery and its real estate crisis continues to deepen. Foreign capital outflows have persisted despite Beijing’s attempts to stabilize confidence. Adding to the headwinds was the widespread downgrade of China’s sovereign and corporate ratings outlook by Moody’s Investors Service.
Hong Kong’s Hang Seng Index is approaching a long-term trend line that dates back to the 1998 Asian financial crisis. The line offered support during the 2008 global financial crisis, and the benchmark index was able to bounce back quickly after crossing the threshold in October last year.
Still, traders fear the index could extend its losses if it falls below support this time, given the poor sentiment. Down more than 17% this year, the HSI is the worst-performing major stock index in the world.
The indicator fell 0.6% on Friday, heading for its lowest close in a year.
The “destiny line” of the Shanghai Composite Index, which has withstood the crises of the past 18 years, has also been tested several times this year. Meanwhile, the CSI 300 index is near its historic trend line after falling this week to its lowest level since 2019. The benchmark for onshore stocks fluctuated between gains and losses on Friday.
–With help from Akshay Chinchalkar.
(Updates with Friday’s movements.)
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