Hang Seng raised 2.3%
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This week, the Hang Seng Index rose 2.3%, while the Hang Seng Tech Index gained 2.6%. Hong Kong stocks kicked off December with a rally, showing an overall trend of steady upward movement. The week’s gains were driven by multiple factors. On one hand, official PMI and Caixin PMI data continued to improve, signaling signs of economic recovery. On the other hand, market expectations are heating up in anticipation of the Central Economic Work Conference, possibly convening next week, which is expected to outline economic targets for 2025 and introduce new stimulus plans. Investors are increasingly positioning themselves for potential policy benefits. Additionally, rumors suggest that the People’s Bank of China may implement its largest interest rate cut in nearly a decade next year, aiming to bolster economic growth and address potential deflationary pressures. This expectation has further buoyed market sentiment.
As of this Thursday, the S&P 500 rose 0.7%, the Nasdaq climbed 2.5%, while the Dow Jones Industrial Average declined 0.3%, with all three major indices reaching record highs. According to ISM data, the November ISM Manufacturing PMI stood at 48.4, exceeding expectations and the previous reading, marking the highest level since June this year and the largest monthly increase since March. Meanwhile, the ISM Services PMI registered 52.1, falling below expectations and the previous reading, marking its first decline since June and the slowest expansion pace in three months. Employment data showed that October JOLTS job openings reached 7.744 million, surpassing expectations and recording the largest increase since August 2023, while ADP data, released in collaboration with the Stanford Digital Economy Lab, indicated private payrolls increased by 146,000 in November, missing expectations and marking the lowest growth since August 2024; October payrolls were revised down from 233,000 to 184,000, the largest downward revision since May last year. The Department of Labor reported that initial jobless claims for the week ending November 30 totaled 224,000, above expectations and the previous reading, while continuing claims for the week ending November 23 fell by 25,000 to 1.87 million. Additionally, the Federal Reserve’s latest Beige Book noted slight economic growth in November, with growth expectations moderately rising across most regions and sectors. However, the report depicted a less optimistic economic picture than official statistics, highlighting flat economic activity, slower hiring, and mild price increases, which may influence the Fed’s December rate cut decision. According to the CME FedWatch Tool, as of December 5, markets priced in a 71.8% probability of a 25-basis-point rate cut at the December meeting, up from 66.0% a week ago, while the likelihood of rates remaining unchanged stood at 28.2%.
In the A-share market, the CSI 300 Index rose 1.4% this week, finding support at the 50-DMA and successfully breaking above the 21-DMA on Friday. Trading volume slightly exceeded last week’s level but remained below the 50-day average. The market showed signs of an upward trend stalling. Support is located at the 50-DMA, with secondary support at the October 18 low of 3,765 points, while resistance is at the November 8 high of 4,200.91 points. On the macroeconomic front, data from the National Bureau of Statistics showed that the November Manufacturing PMI rose to 50.3, marking three consecutive months of improvement and signaling a moderate acceleration in manufacturing expansion. The Non-Manufacturing PMI fell slightly to 50.0, and the Composite PMI remained unchanged at 50.8, indicating overall stable economic growth and sending a positive signal of continued economic recovery. Meanwhile, the Caixin Manufacturing PMI for November stood at 51.5, remaining in expansion territory for two consecutive months. The Caixin Services PMI fell to 51.5, showing a slight slowdown in the pace of expansion, while the Caixin Composite PMI climbed to 52.3, reaching its highest level since July. In other developments, the Ministry of Commerce announced a ban on dual-use items such as gallium, germanium, antimony, and superhard materials for U.S. military users or military purposes, along with stricter reviews on graphite exports. Furthermore, four major industry associations, including the China Association of Automobile Manufacturers and the China Semiconductor Industry Association, issued a joint statement firmly opposing U.S. export restrictions. They advised companies to exercise caution when purchasing U.S. chips and called for government support to foster reliable semiconductor suppliers. On the currency front, the offshore RMB exchange rate against the U.S. dollar rebounded after breaking multiple key levels but still hit its lowest point since November last year. Additionally, the Central Politburo Meeting and the Central Economic Work Conference are scheduled for mid-December, and close attention is advised regarding potential policy developments.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 2.5% for this week. Our Hong Kong Model Portfolio rose by 3.8% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 563.7% vs. a 2.6% down for the Hang Seng.
The best performer in our Hong Kong 33 was NEWBORNTOWN(09911), it’s a global social entertainment company in China. The stock gained 12.0% this week. EPS rating stands at 74, RS rating of 92, and A/D rating of A-.
Our Hong Kong Market Status are in an Uptrend Under Pressure.
From a technical perspective, the Hang Seng Index trended upward this week, successfully breaking above the 21-DMA on Friday. Trading volume was similar to last week but slightly lower, remaining below the 50-day average. The support level is now at the recently breached 21-DMA, while resistance lies near the 50-DMA. On the Southbound inflow side, there was a net inflow of HKD 18.283 billion this week, maintaining a positive trend but showing a decrease compared to last week. Overall, market expectations for economic stimulus policies have risen, with investors anticipating measures to boost economic growth and corporate earnings, leading to early positioning for potential policy benefits. However, the lack of significant volume expansion indicates that the market remains cautious, with many opting to observe rather than actively buy. Policy developments next week are expected to have a major impact on market trends, and investors are advised to stay vigilant. At this stage, it is recommended that investors remain calm and rational, avoid blindly following market trends, and prioritize stocks with better-than-expected earnings and strong technical performance, adopting a prudent investment strategy to navigate market changes.
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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 December 6, 2024