Hang Seng Index nears death cross as China tech stocks stumble
AI Sentiment: 18/100 Bearish
This score is generated through AI-driven analysis of the article's content.
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Sell Hang Seng Index exposure (e.g., Hang Seng Index ETF/ETN tracking the index). The index is below H$24,200 support, down >14% from the year high, and is setting up a death cross (50-day EMA vs 200-day EMA narrowing). This is a momentum + technical breakdown setup, with room to H$23,180 next.
Key Risk: China tech stops falling and the index quickly reclaims H$24,200, invalidating the breakdown and death-cross momentum.
Sell Alibaba. It’s already at a fresh low (since July 14 last year) and is lagging peers after a steep drawdown. With US tech weakness spilling into Hong Kong and investors “booking profits,” BABA’s relative weakness is likely to persist until the broader risk-off move ends.
Key Risk: A clear catalyst forces a sharp rebound (major buyback/earnings surprise or policy support) that reverses the current downtrend.
- The Hang Seng Index slumped and crossed the important support of H$24,200.
- Technology companies like BYD, Alibaba, Baidu, and JD were among the top laggards.
- The index is nearing a death cross as the spread between 50 and 200 EM narrows.
The Hang Seng Index dropped and moved below a crucial support level on Thursday as Chinese technology stocks plunged. It retreated to a low of H$23,988, its lowest level since July 2025. It has moved into a technical correction after falling by over 14% from its highest point this year.
Hang Seng Index slumps as tech sell-off continues
The Hang Seng Index has been in a strong sell-off in the past few days, a trend that has escalated amid the ongoing technology sell-off in the United States.
Technology companies led the sell-off on Thursday. BYD Electronics, the biggest automaker in China, slumped to H$24.38, down by 30% this year and 60% below its highest point last year.
Alibaba stock dropped to $108, its lowest level since July 14 last year. It has underperformed other similar companies like Amazon and eBay after plunging by 415 from last year’s high.
Baidu stock retreated to H$112.4, while companies like JD and Li Auto fell by over 5%. Other non-tech fallers were companies like BeOne Medicines, ENN Energy Holdings, CNOOC, and Sunny Optical.
The ongoing Hong Kong technology sell-off has coincided with what is happening in the United States, where the Nasdaq 100 dropped by over 500 points. Some of the top laggards in the index were companies like Qualcomm, Arm Holdings, Marvell Technology, AppLovin, Western Digital, Broadcom, AMD, and Micron.
These are notable names as they are among the top gainers in the market this year. As a result, there are signs that the sell-off is happening as investors start to book profits.
Rising geopolitical tensions
The ongoing Hang Seng Index sell-off is happening amid the rising geopolitical tensions between the United States and Iran. The US and Iran exchanged fire overnight, a trend that will continue in the foreseeable future.
These attacks happened as President Donald Trump continued to put more pressure on Iran to reach a deal. This is notable as Trump said that the two sides were nearing an agreement.
As a result, crude oil prices have held steady in the past few days. Brent, the global benchmark, rose to $94.7, while the West Texas Intermediate (WTI) rose to $92.
The Hang Seng Index is also slipping as market participants react to the potential for interest rate hikes by the Federal Reserve as US inflation jumps. A report released on Wednesday showed that the US consumer inflation jumped to 4.2%.
Hang Seng Index technical analysis
Hang Seng Index chart | Source: TradingView
The daily chart reveals that the Hang Seng Index has slumped in the past few months, moving from a high of H$28,040 in January to a low of H$24,000. It has dropped slightly below the crucial support level at H$24,200, its lowest point on March 23rd.
Most notably, the index is about to form a death cross pattern as the spread between the 50-day and 200-day Exponential Moving Averages (EMA) narrow. This pattern is one of the riskiest ones in technical analysis.
Therefore, the most likely Hang Seng Index forecast is bearish, with the next key level to watch being at H$23,180, its lowest point on June 20th.
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