CSRC Chairman Wu Qing Pledges Integrated Risk Prevention, Regulation, and Development; State-Owned Firms

China Securities Regulatory Commission (CSRC) Chairman Wu Qing said at a symposium with investors on the 20th that the regulator will continue to integrate efforts to prevent risks, strengthen regulation, and promote high-quality development in the capital market, and will fully maintain stable market operations. Affected by this news, the recently weak Shanghai and Shenzhen A-shares rose, and the Hang Seng Index surged 581 points on the same day. Subsequently, foreign media reported that a Saudi Arabian oil tanker was attacked by Yemen's Houthi forces southwest of Al Shuqaiq in the Red Sea, extending tensions between the United States and Iran from the Strait of Hormuz to the Bab el-Mandeb Strait in the Red Sea, two key international energy shipping routes. The Hang Seng Index fluctuated and closed at 24,963 on the 24th, falling below its 5-day moving average for the second time in the week, but still rose 401 points week-on-week, a gain of 1.63%. Earlier, the HSI fell from June 15 to a low on June 26, then rebounded to July 15, forming a one-month V-shaped recovery pattern. During this V-shaped rebound, the HSI began its decline with a bearish candle on June 15, falling for eight consecutive trading days, dropping a cumulative maximum of 2,529 points before bottoming, but recouped all losses within just half a month.

However, because the rally was too rapid, multiple technical indicators failed to keep pace. The strong stock index, reflecting buying momentum in strong stocks, did not stop falling until July 17, recovering only 3.4% to 17.8% over the past week, still below the weak stock index that reflects selling pressure in weak stocks (which edged down from 20% to 19.4% over the same period). The green-red ratio recently fell to minus 47.7%, the lowest since late September last year. The mid-line breadth, or the proportion of stocks trading above their 50-day moving average, rose another 5% to 35.5% over the past week, remaining within the 30% to 40% support zone. After completing the V-shaped recovery, the HSI is temporarily consolidating around the 24,700 to 25,200 range, which is the volume accumulation zone of the past three months. Looking ahead, the smoothed medium-term breadth (the proportion of stocks with a 10-day moving average above their 50-day moving average) stopped falling from a three-year low of 23.6% on July 8, rose to 30.9% by Wednesday of last week (the 22nd), and recently stood at 33.5%. Although it has not yet broken out of the 30% to 40% support zone, charts show that when the smoothed medium-term breadth re-enters the support zone, it usually drives the HSI higher.

Meanwhile, the short-term breadth (the proportion of stocks with a 3-day moving average above their 18-day moving average) has remained above the 50% bull-bear boundary since the 16th.