The Hang Seng Index Has Two Sides. Are You Watching Both?
Written by Dan Chang C S, Trading Representative, Phillip Securities Pte Ltd
Nov 02, 2026
This article is created in partnership with SGX. All views and opinions expressed are solely those of the author.
Executive Summary
- Why watch the Hang Seng? Hong Kong offers exposure to major Chinese technology, financial and consumer companies, with different market drivers from Singapore's STI.
- What's moving the market? China's economic policies, technology-sector earnings, global interest rates and capital flows remain key catalysts for the HSI.
- My HSI outlook: The technical trend remains bearish, with rebounds presenting potential shorting opportunities. Key resistance levels are 23,700 and 24,400, while support lies at 22,550 and 22,000.
- Why HSI Structured Warrants? SGX-listed Call and Put Warrants allow investors to express bullish or bearish views with leveraged exposure and a smaller initial capital outlay.
- Leverage with defined downside: Unlike margin trading, losses on fully paid structured warrants are limited to the purchase amount, excluding transaction costs. However, investors can still lose their entire investment.
- From market view to market tools: Explore how Macquarie's warrant tools can help investors understand HSI futures movements, warrant pricing and product selection.
- The key takeaway: Structured warrants can amplify the outcome of a market view, but they cannot replace sound analysis, timing and risk management.
Hang Seng Index: A Market That Keeps You Guessing!
Just when you think the Hang Seng has found its footing, it changes direction. And just when investors start losing interest, it springs back to life.
Frustrating? Sometimes. Interesting? Definitely!
If you have been following Hong Kong's stock market over the years, you will probably know what I mean. One moment, investors are getting excited about China's economic recovery, technology stocks and fresh policy support. The next, concerns over economic growth, geopolitical tensions or interest rates come along, and sentiment changes almost overnight. Quite a roller-coaster ride, isn't it?
But here's something I have learnt from trading in the stock markets over the years. A market doesn't necessarily have to be going up all the time to be worth watching. Sometimes, it's the uncertainty that makes things interesting.
And that brings me to the Hang Seng Index (HSI).
For Singapore traders more familiar with our STI, local banks and REITs, Hong Kong might not always be the first market that comes to mind. But perhaps it's worth taking another look. After all, investors don't always have to be bullish to find a market interesting. With instruments such as structured warrants listed on SGX, there are ways to express both bullish and bearish market views.
Hong Kong: More Than Just Another China Market
When we talk about Chinese equities, it's easy to lump everything together. Shanghai, Shenzhen, Hong Kong. Aren't they all part of the China stock market?
Well, not quite.
While Shanghai and Shenzhen are primarily associated with mainland China A-shares, Hong Kong has its own market structure, investor base and mix of listed companies.
The HSI brings together major Hong Kong-listed companies across sectors such as financials, technology, consumer businesses and property. Think familiar names like HSBC, Tencent, Alibaba, and Xiaomi. These businesses are influenced by different factors, from interest rates and credit conditions to technology developments, earnings growth and consumer spending.
For Singapore investors, this offers a different market perspective. Our STI is heavily influenced by DBS, OCBC and UOB, while the Hang Seng has meaningful exposure to Chinese internet platforms, technology companies and financial institutions. Naturally, the two markets can respond quite differently to the same global developments.
After all, there's more to investing than watching our local banks, even though their dividends are certainly nice to receive!
Why the Hang Seng Deserves Attention Now
October hasn't been particularly kind to Hong Kong investors. The HSI ended September 2026 at around 24,600 points, but came under selling pressure in October, briefly slipping below 23,000. By 27 October, it had closed at around 23,040, down approximately 6.4% in less than a month.
What's worth noting is that the weakness wasn't simply about one disappointing company or a single economic announcement. Concerns over China's growth outlook, policy expectations and the performance of technology stocks have all influenced investor sentiment.
Sometimes, markets fall not because the economic outlook has suddenly become terrible, but because reality isn't quite living up to investors' expectations. We have seen this before. Optimism builds, valuations rise, but when the expected recovery takes longer than anticipated, investors start questioning whether the market has run ahead of itself.
So, what could move the Hang Seng next?
For me, three areas stand out.
First, China's economic policies. Measures to support consumption, property markets and economic growth remain important. But beyond the announcements, investors want to see real improvements in business activity and corporate earnings.
Second, technology and corporate earnings. China's push into artificial intelligence, cloud computing and advanced technology presents opportunities for Hong Kong-listed companies. But as I often remind investors, an exciting industry doesn't automatically make every company a good investment. Valuations and earnings delivery still matter.
Third, global interest rates and capital flows. With Hong Kong's linked exchange rate system, US monetary conditions have an important influence on its financial environment. Interest rates, bond yields, global risk appetite and geopolitical developments can all affect investor sentiment.
Put everything together, and there are several forces pulling the market in different directions.
And that's why I think the Hang Seng deserves attention. Not necessarily because it's cheap or due for a rebound, but because changing expectations could create meaningful market movements.
My Take on HSI: A Rebound or More Downside?
This is where I think we need to separate the longer-term outlook from what the market is telling us in the short term.
Fundamentally, I wouldn't write off Hong Kong. It remains home to established financial institutions, major Chinese technology companies and businesses exposed to different parts of Asia's economy. China's technology ambitions and efforts to stimulate economic activity could eventually provide opportunities for selected companies.
But having long-term potential doesn't mean the stock market will start recovering tomorrow. And that's an important distinction.
For the technical picture, I've chosen to look at HSI futures rather than the HSI cash index. More specifically, I'm using a continuous futures chart to assess the broader price trend, without focusing on any single contract month. While the cash index and futures generally move in the same direction, their quoted levels can differ. And since individual futures contracts have different expiry dates, their prices may also differ from the continuous series.
For me, technical analysis (TA) is useful because it helps put market expectations into perspective. I generally look at moving averages to understand the trend, price action to identify possible support and resistance, and trading volume where relevant to assess market participation.
Hang Seng Index Futures (Continuous), Daily, as of 28 October 2026 (source: www.investing.com)
Note: The red projected path illustrates a potential bearish scenario, not a price forecast.
Looking at the Hang Seng Futures daily chart above, the technical picture remains bearish. Since August, prices have been forming a series of lower highs and lower lows, a classic downtrend. More importantly, prices are trading below the 10-day, 50-day and 200-day moving averages (MAs), reinforcing the weakness across different timeframes.
The recent breakdown below 24,400, a key support level that has held on several occasions, has added to selling pressure, with prices now hovering around 23,000. While a technical rebound is possible, there is little evidence of a sustained reversal just yet.
My personal view is to look for shorting opportunities on rebounds rather than chase prices lower. Any recovery towards 23,700, the immediate resistance and previous support level, would be worth watching closely. Failure to break above it could reinforce my bearish near-term view.
On the downside, 22,550 is the critical support to watch, having held during previous sell-offs. A decisive break below this level could signal further weakness and potentially open the door towards 22,000.
For now, the bears remain in control. Until the pattern of lower highs and lower lows is broken, I would remain cautious about treating any rebound as the start of a new uptrend.
Of course, charts don't tell us everything. I will also be keeping an eye on corporate earnings, China's economic developments and whether any market recovery is supported by broader participation among Hong Kong's heavyweight stocks. After all, a technical view is only as good as the market's willingness to confirm it.
But having a market view is one thing. How we choose to express that view is another.
For investors who share my bearish near-term outlook, shorting the futures directly may not necessarily be their preferred approach. And for those who see a potential recovery, going long on futures isn't the only option either. This is where HSI structured warrants listed on SGX come into the picture, offering another way to express both bullish and bearish views on the Hang Seng.
HSI Structured Warrants: Another Way to Express a Market View
So, what makes structured warrants interesting?
For a start, SGX-listed HSI structured warrants allow investors to take a view on the Hang Seng's movements without trading the futures directly. And importantly, they offer the flexibility to participate in both rising and falling markets.
And for Singapore investors, these instruments are conveniently listed on SGX, allowing them to explore Hong Kong market opportunities through our local exchange.
There are two main types. Call Warrants are generally used by investors who expect the underlying market to rise, while Put Warrants are generally used when investors expect it to fall.
Now, remember I used the HSI futures chart earlier for my technical analysis? There's another reason why it's relevant here. Macquarie uses the relevant HSI futures contracts to price and hedge its HSI structured warrants. So, while we commonly follow the HSI cash index to gauge Hong Kong's market direction, investors looking at these warrants should also pay attention to the corresponding futures prices.
It's a small distinction, but an important one when understanding how HSI structured warrants behave.
Another key thing to note is leverage. With a relatively smaller capital outlay, investors can gain exposure to market movements, potentially resulting in amplified percentage gains when the underlying moves favourably.
But here's another feature I think is worth highlighting.
Unlike margin trading, where losses can exceed the initial margin and trigger margin calls, the maximum investment loss on a fully paid structured warrant is limited to the amount paid to purchase it.
For example, if you invest S$1,000 in structured warrants using your own cash, the maximum you can lose on that investment is S$1,000, excluding transaction costs. You won't be asked to top up additional funds simply because the underlying market moves against your warrant position.
That's an important distinction when dealing with leveraged instruments.
Of course, let's not confuse a defined maximum loss with capital protection. Losing the entire S$1,000 is still a very real possibility!
Structured warrants also have expiry dates, and their prices are affected by factors such as time decay, implied volatility, strike price and the time remaining until expiry. This means investors can correctly anticipate the market's direction yet still lose money if the movement is too small, comes too late or other pricing factors work against them.
The attraction is leveraged exposure with a defined maximum investment loss. The challenge is getting the market view, timing and product selection right.
So, how do investors explore the HSI warrants available and understand their characteristics?
This is where Macquarie's warrants website can be useful. Investors can examine available Call and Put Warrants, the relevant HSI futures contracts and how different warrants might respond to market movements.
How to use a Structured Warrant to trade the HSI
Rather than comparing dozens of warrants individually, investors can use the Warrant Selector to identify a warrant that best matches their market view, target price and expected holding period.
Suppose you share the bearish outlook discussed earlier and expect the Hang Seng Index Futures to fall from a rebound towards 23,700 down to 22,550, click on the “put” button after selecting HSI from the underlying drop down.
The "Underlying Entry Price" is where you expect to enter the trade (e.g. 23,700), while the "Underlying Exit Price" is your target level (e.g. 22,550). The tool then estimates how different warrants could perform if that market view plays out once you click on the 
Source: Warrant Selector Tool as of 29 October 2026, https://warrants.com.sg/tools/selector
Assuming the HSI futures pulls back 4.9% from 23,700 to 22,550, the table suggests that the available HSI Put Warrants could generate gains ranging from 66% to 114% in a week and 43% to 72% if the HSI move occurred within two weeks.
Investors will notice that some warrants offer larger potential gains than others due to differences in effective gearing. Generally, higher-gearing warrants can generate larger returns if the market moves as expected, but they are also more sensitive to time decay.
Therefore, the goal isn’t to choose the warrant with the highest projected return, but the one that best balances return potential and available holding time
Find out the maximum holding period for warrants
The Maximum Holding Period is one of the most useful outputs from the Warrant Selector. It helps answer a warrant investor’s critical "how long do I have for my investment thesis to work out?” question.
For example, among the warrants displayed, HSI Put Warrant EZXW offers the longest maximum holding period of around five weeks.
Even if the HSI futures takes close to five weeks to decline from 23,700 to 22,550, the warrant is still projected to generate a gain of approximately 7.4% from SGD 0.068 to SGD 0.073, assuming all other factors remain unchanged.
In contrast, some of the warrants with higher gearing that would gain more if the HSI futures falls quickly e.g. within a 1-week period, would become unprofitable and/or would have expired if the market takes longer to reach the target.
Warrant investors are therefore encouraged to use the Warrant Selector tool to compare amongst warrants based on one’s entry and exit levels on the underlying, and to find out the maximum holding periods for warrants before making an informed warrant trading decision.
The sharing on how one can take a position using warrants has been contributed by Macquarie Warrants Singapore. Please refer to the end of the article for important notice and disclaimers.
The Market View Comes First. The Instrument Comes Second.
Here's something I think is worth remembering.
The product doesn't change your investment thesis. And it certainly doesn't make the investment decision for you. Whether you are buying shares, investing through an ETF or trading structured warrants, the starting point should still be your view of the market.
Why do you think prices could rise or fall? What developments are you watching? And perhaps more importantly, what would make you change your mind?
A structured warrant doesn't tell you whether the HSI will recover tomorrow, nor does it make your prediction more accurate. What it does is provide another way to express that view, with leverage that can amplify both gains and losses.
And while the maximum investment loss on a fully paid warrant is limited to the amount invested, that doesn't mean investors should become less disciplined. Position sizing, timing, product selection, liquidity, bid-ask spreads and issuer credit risk all deserve attention.
For investors who prefer building long-term portfolios and collecting dividends, structured warrants may simply not be the right instrument. And that's perfectly fine.
Not every investment product needs to find its way into our portfolios.
To me, becoming a better trader isn't necessarily about trading more products. It's about understanding what choices are available, knowing their strengths and limitations, and recognising which ones suit our objectives and risk appetite.
As for HSI, I think it's certainly a market worth keeping on the radar. China's economic policies, technology developments, corporate earnings and global capital flows could all influence its next move. Whether that move is up or down, being prepared matters more than pretending we can predict everything.
For Singapore investors looking beyond individual stocks, HSI structured warrants listed on SGX are another instrument worth exploring, particularly for those with a shorter-term market view and an understanding of the risks.
So, the next time you are watching the HSI, don't just ask yourself where the market might be heading. Take some time to understand the different instruments available, how they work, and whether they fit your trading approach.
Because in investing, the right tool can amplify an opportunity. But it can never replace good judgment.
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Disclosure:
The author, from time to time, does short term and intraday trading on HSI SWs. But at the time of publication, the author has no vested interest in the above-mentioned SWs.
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About the Author:
Dan is currently a Remisier / Trading Representative with PhillipCapital and a FinLit Speaker with SGX and SIAS. With over 25 years of experience in the equity markets, he has helped countless investors and traders navigate the often volatile stock market landscape. Through his deep market insights and timely stock information, Dan has consistently added value to their investment journeys, enabling them to make more informed decisions.
As a FinLit Educator, Dan is passionate about financial education and has played an active role in empowering retail investors with the knowledge and skills to better understand investing.
To further promote financial literacy, Dan also serves as a Key Opinion Leader on two of Singapore’s leading investment platforms, InvestSG and InvestingNote, where he regularly shares market commentary, trading ideas and educational content with a wide audience of retail investors.
Get in touch and/or start your investment journey with him here: tinyurl.com/TTP-dan
If you like such content on the Singapore Market, feel free to join my free telegram channel @ tinyurl.com/dan-telegram
Cheers!
Dan
Disclaimers: tinyurl.com/dan-disclaimer
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