Hong Kong stocks halt four-day rout as market’s slump to 14-month low deemed excessive

Alibaba, NetEase and Baidu led a rebound in Chinese tech stocks after a major sell-off this week

The Hang Seng Index’s relative strength indicator is flashing an ‘oversold’ signal to technical traders

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People crossing a busy street near a bank branch in Central, Hong Kong on January 18, 2024. Photo: Li Jiaxing

Published: 11:05am, 18 Jan 2024Updated: 4:44pm, 18 Jan 2024

Hong Kong stocks rebounded on Thursday on speculation that a four-day rout in the city’s benchmark index was excessive. A technical indicator showed the market was oversold and due for a reversal.

The Hang Seng Index rose 0.8 per cent to 15,391.79 on Thursday. The Tech Index climbed 0.5 per cent, while the Shanghai Composite Index in mainland China added 0.4 per cent, overturning a 2 per cent drop.

Hong Kong’s benchmark equity gauge had slumped 6.3 per cent in four previous trading days to the lowest level since October 2022, driving its 14-day relative strength indicator (RSI) fell below 30, a signal to technical traders that stocks are in the oversold zone.

Alibaba Group advanced 1.5 per cent to HK$66.65 while search-engine operator Baidu rallied 3.1 per cent to HK$99.75 and online games operator NetEase rose 1.6 per cent to HK$137.10. HSBC gained 1 per cent to HK$58.55 and Macau casino operator Sands China climbed 1.2 per cent to HK$20.95.

In other major moves, Xinyi Solar rallied 5 per cent to HK$3.97 while developer New World Development added 4.2 per cent to HK$10.46. The RSI readings on both stocks also fell below 30 this week.