Hong Kong's Hang Seng Index is being weighed down by its two large constituent stocks: Tencent (0700) and HSBC Holdings (0005).
Tencent accounts for 10% weighting of the Index, and HSBC 7%.
Tencent was pressured by the latest U.S. government ban on the Company's instant messaging app WeChat. The stock is down 1.7% to HK$516.0 per share at the time of writing.
Meanwhile, Chinese media Global Times reported that HSBC could be included in the Chinese government's "list of unreliable entities" on potential of impacting China's interests. HSBC shares have plunged 4.5% to HK$29.55, the lowest level since 1995.
On a Daily Chart, the Hang Seng Index has formed a Bearish pattern of Lower Highs.
Sources: GAIN Capital, TradingView
Currently it remains subdued at levels below both 20-day and 50-day moving averages.
And the relative strength index is still badly directed below 40, suggesting continued downward momentum for the index.
The trailing Key Resistance has been lowered to 25150.
Unless this level is surpassed, the index is expected to encounter support at 23540 (around the low of June) and 22500 (around the low of May) on the downside.
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