Hang Seng Index Hits Four-Month High Amid DeepSeek’s Success

As shown in the Hang Seng (Hong Kong 50 on FXOpen) chart today, the index has risen above the 21,500 mark for the first time since October 2024.

According to Reuters, bullish sentiment is fuelled by optimism surrounding the success of the DeepSeek startup. Leading gainers include tech stocks:
→ Chipmaker Cambricon Technologies surged 6.2%;
→ AI firm CloudWalk Technology hit the 20% upper limit;
→ Major telecom operators China Mobile, China Unicom, and China Telecom also saw gains after announcing their collaboration with DeepSeek’s open-source model to "promote the inclusive adoption of cutting-edge AI technologies."

Analysts at China Securities believe the uptrend could persist until the second half of March.

Technical Analysis of the Hang Seng Chart

Applying Fibonacci retracement levels using the August low (A) and the October 2024 high (B), we can see how these levels acted as temporary support (marked with arrows) as the price retraced to the January low (C).

In the most optimistic scenario:
→ The rally over the past three weeks may signal the resumption of the A→B uptrend;
→ Based on Fibonacci proportions, bulls may target the 1.618 extension of the initial move, implying a potential price level 61.8% higher than the previous peak.

This suggests a possible target around 25,520, though this appears somewhat ambitious for the Hang Seng (Hong Kong 50 on FXOpen) given:
→ Rising inflation in China—today’s data shows the annual CPI climbed from 0.1% (previous reading) to 0.5%;
→ The prospect of escalating tariff tensions with the US after China retaliated against Trump’s 10% tariffs on Chinese imports.

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