As is so often the case, year-end upward pressure on interest rates in Hong Kong (and also mainland China) has seen its effects ripple through into equities. The H-share futures prices have drifted steadily since the beginning of this month, retracing half of the gentle rally since June. Because historical volatility is at its lowest in a year or so, the index and the lagging line might try to hold in the 9,200-point region until January. However, because of the rounded top, bearish moving averages and thin market conditions, it is more likely that we will see another dip to Fibonacci retracement support at 8,940 points over the next fortnight. We also cannot rule out bearish acceleration.
