Hang Seng raised 13.0%
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This week, the Hang Seng Index surged by 13.0%, while the Hang Seng Tech Index soared by an even more impressive 20.2%. The market saw robust gains this week, fueled by multiple favorable factors. Positive signals from the policy front served as the primary driver for the market rally, including measures such as reserve requirement ratio (RRR) cuts, interest rate reductions, reductions in existing mortgage interest rates, and innovative monetary tools to support the stock market. Additionally, for the first time since the 18th National Congress, the Politburo held a meeting in September. This meeting emphasized boosting the capital market and guiding medium-to-long-term funds into the market, significantly lifting investor confidence. With these multiple positive catalysts, investor sentiment has notably recovered, trading activity surged, and volumes spiked, even temporarily pressuring the exchange’s system. On Friday morning, the Shanghai Stock Exchange experienced brief delays in its trading system, which were quickly resolved, underscoring the market’s fervor.
In the U.S. stock markets, as of this Thursday, the S&P 500 rose 0.8%, and the Dow Jones increased 0.3%, both reaching new all-time highs; the Nasdaq gained 1.4%. On the macroeconomic front, data released by S&P Global showed that the preliminary Markit Manufacturing PMI for September in the U.S. fell to 47, the lowest since June 2023, below both expectations and the prior reading. The preliminary Markit Services PMI for September was 55.4, a two-month low, though higher than expected, and slightly below the prior reading. The preliminary Markit Composite PMI for September was 54.4, also the lowest since July 2024, slightly above expectations but marginally below the previous reading. Additionally, according to a report by the U.S. Bureau of Economic Analysis, the final annualized QoQ GDP growth for Q2 was 3%, slightly above expectations and higher than the prior reading. On the employment front, data released by the U.S. Department of Labor showed that initial jobless claims for the week ending September 21 fell to 218,000, the lowest since May, and below both expectations and the prior reading. Continuing jobless claims slightly increased to 1.834 million.
The CSI 300 surged 15.7% this week on volume above the average and higher than the last week. The market condition was Confirmed Uptrend. On Tuesday, the Shanghai index hit the biggest single-day gain since July 6, 2020, with turnover of RMB971.3 billion in Shanghai and Shenzhen exchanges, an increase of RMB420.3 billion compared with the previous trading session. On Wednesday, A shares fell back after surging high, but the turnover exceeded RMB one trillion, showing a significant improvement in market sentiment. On Thursday, the Shanghai index regained the three thousand point mark. As of the close of trading on Friday, the turnover of the Shanghai and Shenzhen markets exceeded RMB one trillion for three consecutive trading days. This week the CSI 300 index recovered all the key moving averages consecutively and is now above all the key moving averages, hitting a new high this year. The Information Office of the State Council released several major benefits at a press conference on Tuesday, including preparations to cut the reserve requirement ratio by 0.5 percentage points in the near future (The People’s Bank of China officially announced a 0.5 percentage point cut in the reserve requirement ratio this Friday.), lower interest rates on stock mortgages and standardize the minimum down payment ratios for mortgages. For the first time, the People’s Bank of China created structural monetary policy tools to support the capital market, supporting eligible securities, funds and insurance companies to exchange highly liquid assets from the central bank by pledging bonds, stock ETFs, and CSI 300 constituent stocks, and the funds obtained can only be used to invest in the stock market. Meanwhile, the creation of refinancing for stock repurchases and increasing holdings will guide banks to provide loans to listed companies and major shareholders to support the repurchase and increase of stock holdings. In addition, a leveling fund is under study. The one-year medium-term lending facility (MLF) rate of 2.0% in September was 0.3 percentage points lower than the previous month. Expect the subsequent LPRs to move lower following it. With high market sentiment this week, investors are advised to gradually build up their positions and focus on stocks that are both technically and fundamentally good. Due to the fact that there is only one trading day next week, articles will be offline for a week next week.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 8.0% for this week. Our Hong Kong Model Portfolio rose by 8.4% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 584.0% vs. a 1.1% up for the Hang Seng.
The best performer in our Hong Kong 33 was JD LOGISTICS(02618), it’s a Chinese supply chain solutions and logistics supplier. The stock gained 31.4% this week. EPS rating stands at 80, 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 market this week exhibited a simultaneous rise in both volume and price, with trading volume continuing to climb, indicating an increase in market activity and buying power. The buoyant market sentiment propelled the Hang Seng Index to successfully reclaim the 20,000-point threshold, reaching a new 52-week high. In terms of the Southbound inflow via the HK-China Stock Connect, the trend of net inflows continued this week, totaling a net inflow of HKD 2.39 billion, although this was a slight decrease from the previous week. Overall, the current market remains vibrant, and while investors capture positive signals, they must also stay vigilant against potential risks. When making investment decisions, it is essential to comprehensively assess various factors, including policy, fundamentals, technicals, and market sentiment, avoiding blind following of trends and focusing on stocks with stronger-than-expected performance and robust technical indicators.
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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 September 27, 2024