HSCEI – most oversold in 5 years

“Keep your head while others are losing theirs”, in paraphrasing a Rudyard Kipling quote I am paying to attention to investing opportunities in selected listed Chinese companies.

When everyone is ‘hating’ on something vehemently, it’s OK to explore the antithesis.

The Hang Seng China Enterprises Index (HSCEI) closed on Tuesday July 28, 2021 at 8,880 and has fallen 27% from a recent high seen 5 months ago, to now being at its most Oversold Weekly reading since February 2016.

While there will be some finesse to determining an entry point and downward momentum shouldn’t be dismissed, it’s always worthy of scouring for mis-pricing’s when an index falls 12% within 3 trading days.

Incidentally, the SSE (Shanghai) Composite has ‘only’ declined 5.5% over the same time.

I’ll look for the HSCEI to test the 8,550 level which is 3.7% lower than yesterday’s close, it should hold 8,300 but current levels are interesting enough.

3 weeks ago, I wrote this note.

July 28, 2021

by Rob Zdravevski

rob@robzdravevski

17 Year chart of the Hang Seng Enterprises Index (on a weekly basis)

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