The Hang Seng Index is Near Important Support

<img src="https://fxopen.com/blog/en/content/images/2024/01/hang-seng-.jpg" alt="The Hang Seng Index is Near Important Support" /><p>The economy of China is hit by the decision to liquidate the developer Evergrande due to a debt of USD 300 billion. Bloomberg writes that this will have huge consequences for all of China.</p><p>While the S&amp;P 500 index rose by more than 3% since the beginning of January, the Hang Seng index fell by more than 8%. JPMorgan and HSBC point to local government debt, non-performing bank loans and negative sentiment in the private sector.</p><figure><img src="https://fxopen.com/blog/en/content/images/2024/01/301–4-.png" alt="The Hang Seng Index is Near Important Support" loading="lazy" width="2000" height="1099" srcset="https://fxopen.com/blog/en/content/images/size/w600/2024/01/301–4-.png 600w, https://fxopen.com/blog/en/content/images/size/w1000/2024/01/301–4-.png 1000w, https://fxopen.com/blog/en/content/images/size/w1600/2024/01/301–4-.png 1600w, https://fxopen.com/blog/en/content/images/size/w2400/2024/01/301–4-.png 2400w" sizes="(min-width: 720px) 720px" /></figure><p>The weekly chart of the stock index Hang Seng (HSI) shows that:</p><p>→ The price is in a downward trend, which is shown by the black line.<br>→ The price dropped close to the 2022 minimum.<br>→ The RSI indicator is located near the oversold zone.</p><p>What is important: the price is near the lower border of the long-term channel (shown by orange lines), from which support can be expected.</p><p>Expectations of investors to lower the interest rate from the Fed may increase the appetite for risky assets, which features Chinese stocks.</p><p>As Reuters writes, Goldman Sachs noted in its note to clients that hedge funds are actively buying Chinese shares – for the period from January 23 to 25, there was the largest capital inflow in the last 5 years. Perhaps the managers of hedge funds believe that the plans of the Chinese authorities to stimulate the economy for more than $280 billion will become a reality, and the price of the Hang Seng index will make a jump from the lower border of the long-term channel, breaking the black line of the downward trend.</p>