This is a China Syndome in reverse.
The Hang Seng Index (HSI) is down another 4%+ today as China continues to clampdown on technology companies, with the regulators taking aim at the food sector today. The HSI is now down nearly 20% after printing an all-time high in February this year. The indices’ constituents are a sea of red with double-digit losses seen in Alibaba Health Info tech (-18.5%), China Feihe (-16.2%), Meituan Dianping (-17.6%) among others. The Hang Seng Tech index has been hit even harder and the recent sell-off has seen the indices lose over 40% this year,
The daily HSI chart shows the recent damage caused by the government crackdown with the index now trading below all three simple moving averages, while the 50-day sma has fallen through the 200-day sma, forming a bearish ‘death cross’. The CCI indicator is flashing an extreme oversold warning, while volatility, measured by the 14-day ATR, is climbing sharply. The multi-month higher low made at the end of last year has been broken with ease today, leaving the October 30 swing-low at 23,961 the next level of support.
“China syndrome” is a term that describes a nuclear meltdown, where reactor components melt through their containment structures and into the underlying earth, “all the way to China”.
The exchange-traded fund at the epicenter of the Chinese tech implosion is seeing record options activity. Open interest in call contracts for the $4.3 billion KraneShares CSI China Internet Fund is surging as the ETF tumbles more than 20% on Beijing’s sweeping regulatory crackdowns. Investors may be betting that the fund’s price is about to bottom, or taking advantage of a spike in volatility to sell the contracts.
The reverse China Syndrome is that China’s clampdown is bleeding through to other equity markets around the globe.
In related news, CFA Pass Rate Plummets to Record Low of 25% for Level 1 Exam.
Great job college professors!! … NOT!