Hang Seng raised 1.1%
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This week, the Hang Seng Index rose by 1.1%, while the Hang Seng Tech Index increased by 4.1%. Influenced by multiple factors, the Hang Seng Index experienced volatile fluctuations. With the results of the U.S. presidential election, Trump’s victory raised market concerns about the escalation of the trade war. Meanwhile, driven by the key National People’s Congress meeting, the market expects stimulus policies to exceed expectations. Additionally, the Federal Reserve’s decision to cut interest rates by 25 basis points met market expectations. Other factors include favorable Chinese economic data, with exports significantly surpassing analyst expectations, as well as the announcement after market hours on Friday of an increase in the local government debt quota by 6 trillion yuan RMB.
In the U.S. stock market, as of Thursday this week, the S&P 500, Nasdaq, and Dow Jones indices surged by 4.3%, 5.6%, and 4.0%, respectively, all reaching new all-time highs. This week, the U.S. presidential election concluded with Republican candidate and former President Donald Trump emerging victorious. The Republican Party also gained control of the Senate, while the House of Representatives election is still ongoing. On the macroeconomic front, data from the ISM (Institute for Supply Management) showed that the U.S. manufacturing PMI for October fell to 46.5, the lowest since July 2023, marking its seventh consecutive month of contraction and falling below expectations. In contrast, the ISM services PMI for October rose to 56, its highest level since July 2022, significantly surpassing expectations. Regarding interest rates, the Federal Reserve implemented a 25-BP rate cut as expected, stating that the risks to both the economy and inflation were “roughly balanced.” However, the statement omitted the phrase “confidence in the fight against inflation,” sparking speculation about whether the Fed might pause rate cuts in December. In the labor market, the U.S. Bureau of Labor Statistics reported that nonfarm payrolls in October increased by just 12,000, the lowest level since 2020, and well below expectations. The unemployment rate held steady at 4.1%, in line with forecasts. Additionally, the U.S. nonfarm unit labor costs for Q3 showed an annualized increase of 1.9%, significantly higher than the expected 1%. This unexpected rise in labor costs could exacerbate inflationary pressures, leading the Fed to be more cautious in its future rate-cut decisions. Furthermore, for the week ending November 2, initial jobless claims totaled 221,000, below expectations but higher than the previous week. Continuing claims increased to 1.89 million, the highest level since late 2021.
The CSI 300 surged 5.5% this week, with trading volume slightly above last week and exceeding the 50D average trading volume. The market condition remains in a Confirmed Uptrend, with support at the October 18 low of 3,765 and resistance at the October 8 high of 4,450. On the macroeconomic front, China’s Caixin Manufacturing PMI rose to 50.3 in October, above the previous reading, ending September’s brief contraction and returning above the expansion threshold. The sub-index data showed an increase in manufacturing supply, with demand shifting from contraction to modest expansion. The Caixin Services PMI for October reached 52, marking a three-month high and exceeding both prior levels and expectations. The Caixin Composite PMI rose to 51.9, a four-month high, and has remained in expansion territory for a full year. According to data from China’s General Administration of Customs, October exports, valued in USD, rose 12.7% y/y to $309.06 billion, hitting a 27-month high and exceeding the prior level; imports fell 2.3% y/y to $213.34 billion, below the previous level. The trade surplus reached $95.73 billion, the third highest on record. Additionally, the 12th session of the Standing Committee of the 14th National People’s Congress is being held from Monday to Friday this week. At a press conference on Friday, the Minister of Finance announced the approval of an increase in the local government debt quota by 6 trillion yuan to replace existing hidden debts. More policies may be introduced gradually, and close attention should be paid.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 0.4% for this week. Our Hong Kong Model Portfolio rose by 3.6% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 587.8% vs. a 1.6% up for the Hang Seng.
The best performer in our Hong Kong 33 was PC PARTNER(01263), it’s a leading global manufacturer of computer and electronic products. The stock gained 12.4% this week. EPS rating stands at 91, RS rating of 91, and A/D rating of B+.
Our Hong Kong Market Status are in a Confirmed Uptrend.
From a technical perspective, this week’s trading volume has increased slightly compared to last week, but remains slightly below the 50D average volume. The 5-DMA has crossed above the 21-DMA, but failed to stay above the 5-DMA by Friday’s close. Regarding the Southbound inflow via the HK-China Stock Connect, there was continued net inflow of HKD 32.33 billion, more than double last week’s amount. The market volatility this week was mainly driven by various uncertainties, some of which have been clarified. Moving forward, it is important to closely monitor the policies that may be introduced by the 12th session of the 14th National People’s Congress Standing Committee, as these could significantly impact market trends. Therefore, investors are advised to remain calm, respond rationally, avoid blindly following the crowd, and focus on stocks with better-than-expected earnings 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 November 8, 2024