Is There Reason to Be Concerned About the Hang Seng?

Even as Hong Kong shares are holding on to their eighth straight monthly gain, recent derivatives activity shows investors are getting jittery about Asia’s best-performing market this year. Bearish options volume on the Hang Seng Index is heading for its highest level since August 2011 this month, with the ratio of outstanding puts versus bullish calls near a 10-year peak. The hedging is happening as the benchmark gauge surged 25 percent since January, reaching a more than two-year high Aug. 8.

While a stabilizing Chinese economy and brighter earnings prospects have helped lift the Hang Seng Index, gains concentrated in some heavy-weight stocks such as Tencent Holdings Ltd. are raising concerns they may turn to pitfalls. And recently, the growing tension surrounding North Korea and worries over the impact of U.S. President Donald Trump’s administration on Asian shares have prompted investors to hedge, according to Hao Hong, chief strategist at Bocom International Holdings Co.

Source: Asia’s Top Stock Market Is Suddenly Drawing a Crowd of Skeptics – Bloomberg

Indices Pare Losses as Jackson Hole Gets Underway

Euro and Dollar Seek Guidance from Jackson Hole

This article is for general information purposes only. It is not investment advice or a solution to buy or sell securities. Opinions are the authors; not necessarily that of OANDA Corporation or any of its affiliates, subsidiaries, officers or directors. Leveraged trading is high risk and not suitable for all. You could lose all of your deposited funds.

Craig Erlam

Craig Erlam

Senior Currency Analyst at OANDA
Based in London, England, Craig Erlam joined OANDA in 2015 as a Market Analyst. With more than five years' experience as a financial market analyst and trader, he focuses on both fundamental and technical analysis while conducting macroeconomic commentary. He has been published by The Financial Times, Reuters, the Wall Street Journal and The Telegraph, and he also appears regularly as a guest commentator on networks including Sky News, Bloomberg, CNBC and BBC. Craig holds a full membership to the Society of Technical Analysts and he is recognized as a Certified Financial Technician by the International Federation of Technical Analysts.