Hang Seng: Hanging On By A Thread + Richemont Breaking Lower
Political tensions in between the US and China as a result of the introduction of new laws in relation to Hong Kong may see a new wave of riots spring up in the region, and possibly reignite the volatility seen during 2019 when the city experienced it’s worst period since the 1990s.
A review of the monthly chart of the Hang Seng sees the index losing long term momentum, with the price threatening a downside break of the trend line going back to February 2009. We also note a double top technical formation while the Relative Strength Index (RSI) currently prints 39, suggesting a long term weakening trend.
With tensions in Hong Kong rising once again, this may be a further catalyst for weakness in Richemont, which was sharply lower on Friday (a combination of ZAR strength, risk-off and HK).
At current levels, the price remains at risk of a break of the channel which may prompt a long term move to the sub-70 range. Our recent note (5 April 2020) outlines the potential for downside risk. ( https://online.unum.co.za/research-2/research-note-compagnie-financiere-richemont-cfr )
Trading Desk Analyst
Unum Capital (Pty) Ltd
An Authorised Financial Services Provider (FSP 564)