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Hong Kong's equity bulls keep burning their fingers this year
[HONG KONG] Being pessimistic has been the best way to play Hong Kong's equity market this year.
After the Hang Seng Index's best start to a month since October 2015, the city's shares have given back those gains and are now in the red. The gauge is tracing a pattern that it's held since October, tempting bulls with a good week only to fall the next. The gauge sank as much as 2.9 per cent on Thursday, dipping below its 50-day moving average after trading above that support line for eight consecutive sessions.
Just last month improving momentum turned the city into the world's best place for equity investors. But such optimism, triggered by dovish Federal Reserve comments and reinforced by signs that US and China were putting their trade dispute on hold, was fleeting. Hong Kong's stocks are on track to end 2018 with their worst quarterly performance in more than three years.
Losses of Thursday's magnitude are becoming increasingly frequent: the city's traders have already endured more 2 per cent-plus declines this year than all of 2017 and 2016 combined. It would take the biggest December rally in 25 years for Hong Kong's equity market to end the year where it started.