More volatility for Hang Seng Index?

THE performance of the Hang Seng Index (HSI) in the past year has been volatile with the index moving in a range of around 30 per cent from low to high over the past 52 weeks. After the lows during the months of March, May and September 2020, the index has been on a general bull run till mid-Feb 2021 when it started to experience a downtrend, in contrast to the performance of US indexes.

Year to date, the HSI has declined more than 10 per cent and the trend might continue if there is still volatility ahead due to various factors. The increase in regulatory oversight in various sectors has hit Chinese firms as well as Hong Kong listings. The casino industry in Macau might be the latest casualty in the latest round of regulations imposed, where most are listed in Hong Kong or the US.

The recent power shortage in China also caught businesses by surprise. Companies which require more electricity for production might face obstacles in their attempt to scale up operations. China's official Purchasing Managers' Index (PMI) came in at 49.6 for the month of September, below the 50.1 expected by analysts, signifying a slight contraction.