UBS Says Asian Stocks Are Deeply Oversold
Crhk · 1 SOURCESabout 3 hours ago2 MIN
Summary
UBS strategist Zain Nizami said in a new report that Asian equities have become extremely oversold on technical measures, prompting a shift toward buying on weakness rather than maintaining an outright bearish stance. He highlighted the Hang Seng Tech Index and CSI 300 as key examples, with both showing very weak relative strength readings and pressure around long-term trend levels. UBS also said Thursday's trading showed intense selling concentration in Hong Kong and South Korea, even as it cautioned that macro and correlation risks have not fully disappeared. In contrast, the bank said parts of Europe look technically overheated, while elevated short positioning in US equities raises the risk of a squeeze higher
Key Points
- Nizami said the Hang Seng Tech Index had an RSI of 27 and was trading 23% below its 200-day moving average
- The CSI 300 recorded an RSI of 23.9, a historical low, and was testing support at its 200-day moving average
- Hong Kong absorbed most of Thursday's selling pressure, with the Hang Seng Index logging an “overwhelming down day” as 95% of stocks fell
- South Korea's KOSPI also saw broad-based weakness, with 627 declining stocks versus only 152 advancing issues
- UBS said about 40% of Swiss SMI constituents and roughly 25% of Germany's DAX constituents had RSI readings above 70
Why It Matters
For Hong Kong investors, the call suggests the market may be entering a phase where selective dip-buying offers a better risk-reward balance than chasing further downside. At the same time, UBS's caution against a full risk-on turn indicates that volatility could remain high, especially if macro risks reassert themselves before panic-style capitulation appears