Hang Seng raised 7.0%
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This week, the Hang Seng Index surged 7.0%, successfully reclaiming the 22,000-point level and approaching the high reached during the 2024 National Day holiday. The Hang Seng Tech Index also performed strongly, rising 7.3% to reach its highest level since late February 2022. The continued excitement around artificial intelligence applications was a key driver of this week’s market rally. Additionally, recent economic data has shown continued improvement, signaling a recovery in consumer activity and suggesting that China is likely to emerge from the deflationary shadow with sustained economic recovery. Meanwhile, the tourism and movie markets during the Spring Festival also delivered impressive results, with both the number of travelers and spending seeing growth, and box office revenue and moviegoers reaching new historical highs.
In the U.S. stock market, as of this Thursday, the S&P 500 gained 1.5%, the Nasdaq rose 2.2%, and the Dow Jones increased 0.9%. On the macroeconomic front, data from the U.S. Bureau of Labor Statistics showed that CPI rose 3% y/y in January, surpassing both expectations and the previous reading. On a m/m basis, CPI increased by 0.5%, marking the largest gain since August 2023 and the seventh consecutive month of acceleration. Core CPI rose 3.3% y/y, while the m/m increase was 0.4%, both exceeding expectations and prior readings. Meanwhile, PPI climbed 3.5% y/y in January, reaching its highest level since February 2023. On a m/m basis, PPI rose 0.4%, exceeding expectations but lower than the previous reading, which was revised up from 0.2%, adding complexity to the inflation outlook. Core PPI increased 3.6% y/y, also surpassing expectations and the prior reading, while its m/m gain of 0.3% matched forecasts but was lower than the revised previous figure of 0.4%. With inflation facing the risk of reversal and the labor market remaining strong, the Federal Reserve is likely to hold rates steady for the foreseeable future. Traders have now pushed back expectations for the Fed’s next rate cut from September to December. In terms of policy, U.S. President Donald Trump signed an executive order imposing a 25% tariff on all steel and aluminum imports. On the employment front, data from the U.S. Bureau of Labor Statistics showed that nonfarm payrolls increased by 143,000 in January, marking a three-month low and falling well short of expectations. However, December’s job gains were significantly revised up from 256,000 to 307,000. Initial jobless claims for the week ending February 8 came in at 213,000, slightly below expectations, while the previous reading was revised up from 219,000 to 220,000. Continuing jobless claims fell by 36,000 to 1.85 million in the prior week.
In the A-share market, the CSI 300 Index gained 1.2% this week. The index held above its 50-DMA, with weekly trading volume slightly exceeding the 50-day average. The market remains in a rally attempt. The current support level is at the 50-DMA, with secondary support at the year-to-date low of 3,704.11 set on January 13, while resistance stands at the 4,000 level. On the macro front, data from the National Bureau of Statistics showed that China’s CPI growth accelerated in January 2025, rising 0.7% m/m after remaining flat the previous month, while the y/y increase widened to 0.5% from 0.1% in December. Core CPI rose for the fourth consecutive month, up 0.5% m/m and 0.6% y/y, with both readings higher than the prior month. PPI declined 2.3% y/y, while the m/m drop widened to 0.2%, 0.1 percentage points larger than in the previous month. In the gold market, data from the State Administration of Foreign Exchange showed that China’s gold reserves stood at 73.45 million ounces at the end of January, an increase of 160,000 ounces from 73.29 million ounces at the end of December, marking a 0.22% m/m rise and the third consecutive month of accumulation. Additionally, new loan data and other key indicators are set to be released, and the revised narrow money (M1) definition will take effect. The revision expands the existing M1 metric to include individual demand deposits and customer reserves held by non-bank payment institutions.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 4.1% for this week. Our Hong Kong Model Portfolio rose by 3.2% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 643.7% vs. a 12.7% up for the Hang Seng.
The best performer in our Hong Kong 33 was MEDLIVE(02192), it’s a leading medical information and professional service platform in China. The stock gained 29.0% this week. EPS rating stands at 98, RS rating of 93, and A/D rating of A.
Our Hong Kong Market Status are in a Confirmed Uptrend.
From a technical perspective, the Hang Seng Index successfully reclaimed the 22,000-point level this week, with daily trading volumes for all five trading days significantly surpassing the 50-day moving average, and trading turnover substantially increasing, reflecting an active market with dynamic capital flow. The market remains in a Confirmed Uptrend. Short-term support is firmly positioned at the 5-DMA, while resistance is focused on the high reached during the 2024 National Day holiday. Regarding the Southbound inflow via the HK-China Stock Connect, the net inflow trend continued this week, marking the 25th consecutive week of net inflows. A total of HKD 21.77 billion flowed in this week, nearly equivalent to the total of the previous three weeks combined. Overall, driven by multiple positive factors, Hong Kong stocks showed strong momentum this week, particularly with notable performances in the technology and internet healthcare sectors, which further boosted market confidence. Hong Kong stocks have entered a technical bull market phase. However, investors should still be mindful of potential short-term technical correction risks and maintain a cautious attitude. It is recommended that investors remain calm and rational, avoiding blind chasing of rallies. Focus should be on stocks with better-than-expected earnings and solid technical patterns, using a prudent strategy to navigate market fluctuations.
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published on February 14, 2025