Hang Seng slips as China growth softens and technicals warn

The Hang Seng Index fell on Tuesday to HK$24,507, more than 12% below its year-to-date peak of HK$28,050, leaving the market in a correction. The slide followed a package of weak economic readings for May from China’s statistics agency.

The agency reported a 3.5% decline in the national house price index in May. Retail sales fell 0.6% in May after a 0.2% increase in April, marking the first monthly contraction in consumer spending since the COVID pandemic. Fixed-asset investment was down 4.1% year to date, deeper than the expected 2% decline.

Trade and investment data showed areas of strength. Exports rose 19.4% in May to more than $376 billion, while imports slowed to $271 billion. Foreign direct investment into China increased to $40 billion in the first four months of the year.

Market moves were uneven across sectors and stocks. Technology names led the declines year to date: Trip.com fell about 36% after a regulatory investigation was announced, Xiaomi declined roughly 34%, Kuaishou dropped about 30.6%, and Meituan, Tencent and Alibaba each fell more than 25%. Other notable losers included ENN Energy Holdings, JD Health, Shenzhou International, Sands China and Laopu Gold. On the upside, Lenovo Group, Contemporary Amperex Technology, Techtronic Industries, CK Hutchison and China Resources Land posted gains within the index.

The Hang Seng diverged from some regional peers. South Korea’s Kospi and Japan’s Nikkei 225 hit record highs in recent sessions, supported by strength in semiconductors and AI-related stocks, while Hong Kong’s benchmark retreated.

Technical indicators show additional downside risk. The index’s 50-day moving average has crossed below its 200-day moving average, creating a death cross. The chart also displays a head-and-shoulders pattern, and the index is trading below the pattern’s neckline. The next technical support level is near HK$23,000.

Trading volumes and investor flows were affected by concentrated declines in large-cap technology names, which carry substantial weight in the Hang Seng. The index’s performance this year has reflected mainland economic readings and regulatory developments that have influenced Hong Kong-listed companies, particularly in technology, property and consumer sectors.