The Hang Seng Index has gained significant strength against the Straits Times Index, rising above its 50-day moving average at 20,965. The HSI touched a one-month high of 22,014 on June 8, just short of its still declining 100-day moving average at 22,042. With the 50-day moving average attempting a gradual upturn, and several Singapore dollar based ETFs which track indices in Hong Kong such as the Hang Seng Tech Index and the MSCI China Index forming base formations and breaking out of these base formations, the HSI could move above the 22,000 level. Support is at the 50-day moving average at 20,965.
Interestingly on June 10, the SGX announced that SGX-listed China equity ETFs recorded a 25th consecutive month of combined net inflows, with $468 million of net creations since 2020. This included $104 million of net creations year-to-date.
The STI on the other hand was unable to hold on to its break above its 200-day moving average at 3,224 and fell sharply on June 10. This move is a sign of weakness, partly because it occurred at the end of a trading week, when the STI closed at 3,181, down 50 points week-on-week.
Since the 50- and 100-day moving averages have made a negative cross at 3,213 and 3,306 respectively, the STI may spend the week of June 13-17 floundering and possibly turning volatile.
Part of the reason for a technically challenging week, is because the STI’s quarterly momentum was not able to break above its own resistance at its equilibrium line. The STI has fallen below its immediate support at 3,221. The next immediate support is at current levels, at 3,180, and then at 3,165. A break below 3,165 indicates a minor downside so let’s hope it doesn’t get to that.
See also: STI’s upside from breakout remains valid as risk-free rates fade, but stay watchful for FOMC
