The Chinese Hang Seng index rose 4% in trading on Tuesday after verbal interventions by the regulator and institutional investors.
• The Chinese securities regulator announced that it intends to take measures to support the stock market and meet with Head of State Xi Jinping. The regulator plans to prevent a further collapse of the Chinese stock market.
• Following the regulator, the Chinese state fund Central Huijin Investment spoke out in support of the stock market, which promised to expand its investments in exchange-traded funds.
• New restrictions on short selling were introduced last week. Additional restrictions on securities lending may be introduced in March, according to the Chinese regulator.
• Earlier, the media also reported that the authorities intend to use $278 billion to purchase shares.
What to do about it?
It is not clear how long the positive will last. Technically, the index has solid potential to reach the 200-day moving average and the upper boundary of the descending channel. There is a chance for a local reversal, the first confirmation of which will be a rise above 16,250–16,300. Globally, the trend in the index remains downward.
Russian investors can win back the recovery of the Chinese stock market in Hong Kong through the Hang Seng Index futures traded on the Moscow Exchange: the current contract for March is HSH4 .
Do not forget that futures are assets with increased risk due to the leverage effect, and it is worth having a reserve of cash and/or liquid assets in your account that can act as collateral. It is reasonable to leave an amount in the account, for example, equal to 5 GO values. The balance parameter is individual – it depends not only on your goals and risk profile, but also on the volatility of the instrument itself.