(Bloomberg) -- Signs of euphoria are showing in Hong Kong's stock market as investors brush off five months of protests and an economic recession.
The Hang Seng Index is up almost 10% from its August low and back above the key 27,000-point level. The rally is the most widespread since January 2018, as 34% of the benchmark's members reached overbought territory with relative-strength indexes above 70. The Hang Seng's RSI is at its highest since April.
Hong Kong's stock gains, part of a global rally that has pushed U.S. equities to record highs, comes despite a deteriorating business outlook for the city as it faces a global trade slowdown and domestic political unrest and violence.
Increased optimism over U.S.-China trade negotiations and a rally in China's yuan has also helped improve risk sentiment. Many of the companies on the Hang Seng measure are from mainland China, and generate most of their earnings in yuan.
The Hang Seng Index's jump Tuesday, capping an almost 4% gain within the past week, has put the index near its 200-day moving average. Closing above that technical metric -- which hasn't happened since end of July -- would be a bullish signal.
To contact Bloomberg News staff for this story: Amanda Wang in Shanghai at twang234@bloomberg.net
To contact the editors responsible for this story: Sofia Horta e Costa at shortaecosta@bloomberg.net, Kevin Kingsbury, David Watkins
©2019 Bloomberg L.P.
With assistance from Bloomberg
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