Hang Seng raised 10.2%
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This week, the Hang Seng Index surged by 10.2%, and the Hang Seng Tech Index soared by 17.4%, with the market closed for one day on Tuesday due to the National Day holiday. This week’s rally not only marked a perfect end to September but also a strong start to October. Behind the market’s surge, multiple positive factors continued to drive momentum. First, the People’s Bank of China announced improvements to the pricing mechanism for commercial personal housing loan interest rates. Additionally, the market interest rate pricing self-regulatory mechanism proposed a batch adjustment of existing mortgage rates, and the four major state-owned banks announced they would release specific operational guidelines on October 12. Furthermore, various local governments have successively introduced favorable policies for the housing market, further promoting the stable development of the real estate sector. At the same time, the State Council’s executive meeting over the weekend emphasized the need to study new incremental policies in response to changing conditions, with a focus on gathering feedback from various parties and continuously optimizing and refining policy measures. This has further fueled market expectations.
In the U.S. stock markets, as of this Thursday, the S&P 500 index fell by 0.7%, the Nasdaq index dropped by 1.1%, and the Dow Jones index declined by 0.7%. On the macroeconomic front, data from the U.S. Department of Commerce showed that the core PCE price index rose by 0.1% m/m in August, marking the lowest increase since May and beating both expectations and the previous value. On a y/y basis, it grew by 2.7%, the highest since April, in line with expectations. The overall PCE y/y fell to 2.2%, the lowest since March 2021, also beating both expectations and the previous value. After the data was released, market expectations for significant future rate cuts strengthened. However, Federal Reserve Chairman Jerome Powell, in a speech at the annual meeting of the National Association for Business Economics (NABE) held in Nashville on Monday, stated that if economic data remains consistent, there could be two more rate cuts this year, but each would be small, at only 25 basis points. This aligns with the Fed’s September dot plot forecasts, dampening market expectations for significant rate cuts. Additionally, ISM data showed that the U.S. ISM Manufacturing Index for September registered at 47.2, missing expectations and remaining unchanged from the previous value, marking six consecutive months of contraction. Meanwhile, the ISM Services PMI rose to 54.9, significantly beating expectations and showing a sharp rebound from August. This marked three consecutive months of expansion, with the September expansion rate being the fastest since February 2023. In the labor market, the U.S. Bureau of Labor Statistics reported that August job openings surged to a three-month high, exceeding expectations. At the same time, data released by the ADP Research Institute in collaboration with the Stanford Digital Economy Lab showed that ADP employment increased by 143,000 in September, beating both expectations and the previous value. Additionally, the U.S. Department of Labor reported that initial jobless claims for the week ending September 28 came in at 225,000, slightly higher than last week and above both expectations and the previous value.
This week, with only Monday open for trading due to the National Day holiday, the CSI 300 Index surged by 8.5%. Trading volume on the Shanghai and Shenzhen stock exchanges skyrocketed, hitting a record high of RMB 2.61 trillion, while the entire brokerage sector saw a rare full board limit-up. In a monthly review, the Shanghai Composite Index rose 17.4% in September, the Shenzhen Component Index surged by 26.1%, the CSI 300 soared by 21.0%, and the ChiNext Index skyrocketed by 37.6%, setting a new record for single-month gains. Looking ahead, with continued policy support and improvements in market fundamentals, the A-share market is expected to move forward steadily. However, investors should remain rational, be cautious in dealing with market fluctuations, and focus on risk management and asset allocation.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 8.4% for this week. Our Hong Kong Model Portfolio rose by 7.5% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 641.7% vs. a 11.4% up for the Hang Seng.
The best performer in our Hong Kong 33 was MEITUAN-W(03690), it’s a Chinese lifestyle service e-commerce platform. The stock gained 29.7% this week. EPS rating stands at 84, RS rating of 95, and A/D rating of A+.
Our Hong Kong Market Status are on an Confirmed Uptrend.
From a technical perspective, the Hang Seng Index has posted three consecutive weeks of gains on the weekly chart, with trading volume continuously expanding. On Monday, the single-day trading volume reached HKD 505.8 billion, setting a new all-time high. Despite the National Day holiday this week, which limited the Southbound inflow via the HK-China Stock Connect to just one trading day, net purchases on that day still reached HKD 10.958 billion. While the market experienced some adjustments on Thursday, it quickly rebounded, showcasing its strong resilience. On Friday, the Hang Seng Index continued to rise sharply, hitting a 52-week high. With such strong momentum, next week’s Hong Kong stock market is undoubtedly one to watch. However, while investors capture positive signals in the market, they should remain cautious and guard against potential risks, such as the ongoing escalation of tensions in the Middle East and the decreasing likelihood of a 50-basis-point rate cut by the Federal Reserve in November. When making investment decisions, it is essential to carefully consider multiple factors, including policy developments, fundamentals, technical analysis, and market sentiment. Avoid blindly following trends and focus on stocks with earnings that exceed expectations and strong technical performance.
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Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.
published on October 4, 2024