Hang Seng raised 1.9%
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This week, due to the Christmas holiday, the Hong Kong stock market was closed for 2.5 trading days. The Hang Seng Index rose by 1.9%, and the Hang Seng Tech Index gained 2.1%. On the news front, with many overseas markets also closed for the holiday, the overall atmosphere was relatively calm. Last Friday’s macroeconomic data was weak, leading to renewed interest in high-dividend stocks. Additionally, on Monday, the market was spooked by fears triggered by the new “Nine Articles” policy, with the CSRC urgently responding to rumors of “36 companies being delisted,” stating that many companies are resolving delisting risks, which helped ease market panic and played a positive role in stabilizing market sentiment.
In the U.S. stock market, as of Thursday this week, the S&P 500 index rose by 1.8%, the Nasdaq index by 2.3%, and the Dow Jones index by 1.1%. On Tuesday, trading ended three hours early, and the market was closed all day Wednesday for Christmas. Possibly influenced by the holiday, trading volumes during the week were generally low. On the macroeconomic front, data from the U.S. Bureau of Economic Analysis showed that the November PCE price index increased by 2.4% y/y, the highest level since July, exceeding the previous reading but below expectations. m/m, it rose by 0.1%, which was lower than expected. The core PCE price index increased by 2.8% y/y in November, unchanged from the previous reading but also below expectations. m/m, it rose by 0.1%, the lowest since May, indicating easing price pressures. Personal consumption expenditures (PCE) in November rose by 0.4% m/m, unchanged from the previous reading but also below expectations. In the employment sector, the U.S. Department of Labor reported that initial jobless claims for the week ending December 21 totaled 219,000, lower than the previous reading and expectations, marking the lowest level in a month. This indicates that the U.S. job market remains stable. However, continuing claims increased by 46,000 to a seasonally adjusted 1.91 million, exceeding expectations and reaching the highest level in three years (since the week ending November 13, 2021), reflecting that the labor market is still recovering from the severe downturn caused by the pandemic.
In the A-share market, the CSI 300 index rose by 1.4% this week, reclaiming its 50-DMA. Trading volume was slightly higher than last week but remained below the 50-day average volume, indicating that the market remains in an Uptrend Under Pressure. The support level is at the November 25 low of 3812.32 points, while the resistance level is at the December 10 high of 4098.38 points. Recently, the People’s Bank of China authorized the National Interbank Funding Center to announce that the loan prime rates (LPR) for 1-year and 5-year terms remain unchanged at 3.1% and 3.6%, respectively. Industry experts anticipate that monetary policy adjustments will intensify next year, with room for further reserve requirement ratio (RRR) and interest rate cuts. Meanwhile, the National Fiscal Work Conference was held this week. The meeting outlined plans to adopt a more proactive fiscal policy in 2025, including raising the deficit ratio, increasing expenditures, issuing more government bonds to stabilize growth and optimize the economic structure, raising pension and healthcare subsidy standards to boost consumption, and promoting industrial transformation and upgrading by implementing supportive policies for specialized and innovative small and medium-sized enterprises (SMEs). Additionally, the State Council issued the Opinions on Optimizing and Improving the Local Government Special Bond Management Mechanism, emphasizing the expansion of the use of special bonds as project capital to better support infrastructure, address shortcomings, improve livelihoods, and promote investment. At the same time, the central bank conducted a 300-billion-yuan medium-term lending facility (MLF) operation, maintaining the interest rate unchanged. This marks the fifth consecutive month of reduced MLF issuance. Currently, the central bank is leaning towards “maintaining liquidity support without excessive easing” for market funding, with attention focused on whether a reserve requirement ratio cut will be initiated around the time of the MLF renewal.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 2.9% for this week. Our Hong Kong Model Portfolio rose by 0.5% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 592.6% vs. a 1.5% down for the Hang Seng.
The best performer in our Hong Kong 33 was BYD ELECTRONIC(00285), it’s a globally leading provider of high-tech innovative products. The stock gained 10.7% this week. EPS rating stands at 60, RS rating of 85, and A/D rating of B+.
Our Hong Kong Market Status are in an Uptrend Under Pressure.
From a technical perspective, this week, the Hang Seng Index successfully reclaimed the 20,000-point level, as well as the 21-D and 50-D MA, but overall, it remains in a sideways consolidation trend. In terms of trading volume, due to the Christmas holiday and year-end factors, the overall volume has been relatively sluggish. As for the Southbound inflow via the HK-China Stock Connect, there was a net inflow of HKD 16.37 billion this week, continuing the trend of capital inflows. Overall, the Hong Kong stock market is still affected by various uncertainties. On one hand, the complexity and uncertainty of the global economic environment will continue to influence market sentiment and investor decisions. On the other hand, policy, regulatory changes, and corporate earnings performance will also remain focal points for the market. In addition, next Tuesday, the National Bureau of Statistics of China will release the December manufacturing PMI index, which needs to be monitored for whether it meets expectations. Therefore, at this stage, it is advised that investors remain calm and rational, avoid blindly following the market, and focus on stocks that have exceeded earnings expectations and show strong technical trends, in order to navigate market fluctuations with a steady investment strategy.
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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 27, 2024