By IFCMarkets

Improving data bullish for HK50

Hong Kong’s economic data in the last week were better than expected: private sector contraction was slower than expected in January, and foreign reserves rose more than expected. While the January reading of purchasing managers index was below 50 again, indicating contraction in the private sector, it was higher than expected: 46.8 instead of 45.2. Though indicating contraction again, the positive factor was the reading was higher than the value of 42.1 registered for the previous month, meaning a slowing of contraction in private sector activities. Another positive development was increase in foreign reserves to $445.9 billion from $441.3 billion. Improving data are bullish for HK50. The positive readings are welcome change after GDP advance report indicating economy contraction speeded up in the fourth quarter of 2019. And following the disappointing GDP report was the December retail sales report, indicating sales continued to fall albeit at slightly slower rate: 21% over year after 25.5% in November. Further deterioration of Hong Kong economic performance is a downside risk.

Summary of technical analysis

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