Hang Seng raised 0.9%
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This week, the Hang Seng Index rose by 0.9% and the Hang Seng Tech Index increased by 1.5%. The market experienced significant volatility. After last week’s ‘Black Friday’, the global stock markets faced an even more severe ‘Black Monday’ this week, with intensified sell-offs and a gloomy sentiment. The main reasons remain concerns about a potential U.S. economic recession, along with the unexpected interest rate hike by the yen and escalating tensions in the Middle East. However, the market rebounded over the last three days, mainly due to a sharp decline in initial jobless claims in the U.S. last week, which eased recession fears. Next week, China will release its economic data for July, and the U.S. will also publish July CPI data, which may lead to market fluctuations. It is advisable to stay closely tuned.
As of Thursday, U.S. stock markets showed declines, with the S&P 500 index falling by 0.5%, the Nasdaq down 0.7%, and the Dow Jones down 0.7%. In terms of the job market, the U.S. nonfarm payrolls data for July, released last Friday, revealed a net addition of only 114,000 jobs, significantly below market expectations and previous figures, while the unemployment rate climbed to 4.3%, the highest level in nearly three years. This unexpectedly weak data triggered significant volatility in global stock markets, and, combined with factors such as the strengthening yen and escalating tensions in the Middle East, led to a “Black Friday” followed by a “Black Monday” in global markets. Fears of an economic recession emerged as the dominant factor, with the “fear index” VIX soaring by 181% to 65.73 at one point, reaching its highest level since the COVID-19 pandemic began in March 2020. However, the latest employment data released by the U.S. Department of Labor on Thursday showed that initial jobless claims for the previous week fell to 233,000, below market expectations and previous figures, marking the largest decline in a year and alleviating some of the recession concerns. Additionally, the continued decline in the yen helped mitigate market volatility caused by the unwinding of carry trades. On Thursday, U.S. stocks opened higher and rallied, closing near their intraday highs, with the S&P 500 index posting its largest single-day gain in 21 months. Furthermore, ISM data indicated that the U.S. ISM Services Index regained expansion in July, reversing the most severe contraction in four years recorded in June.
The CSI 300 fell 1.6% this week on volume below the average and lower than the last week. The market condition was Downtrend. The index continued to adjust this week and remains below all key moving averages. Support is at the Feb. 2 low of 3108. Resistance is at the 21DMA. The CPI rose 0.5% y/y in July, higher than previous and expected. The PPI fell 0.8% y/y, unchanged from previous and expected. The Caixin services PMI was 52.1 in July, higher than previous. Exports rose 7% y/y in July, lower than previous and expected. Imports rose 7.2% year-on-year, well ahead of both expectations and the previous reading. Overall, it’s mixed. The news of the Bank of Japan’s wanting rate hike superimposed on concerns about a slowdown in the U.S. economy triggered by a much weaker-than-expected U.S. non-farm payrolls number in July has caused turmoil in global financial markets. Investors are advised to remain patient and wait for the index to regain its 21DMA. Northbound outflow via the HK-China Stock Connect was RMB14.8B.
Leading stocks fell this week. The average stock in the MarketSmith Hong Kong 33 fell by 0.4% for this week. Our Hong Kong Model Portfolio rose by 1.2% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 530.0% vs. a 16.2% down for the Hang Seng.
The best performer in our Hong Kong 33 was HANSOH PHARMA(03692), it’s is a Chinese investment holding company mainly engaged in drug research and development, production, and sales. The stock gained 13.7% this week. EPS rating stands at 96, RS rating of 93, and A/D rating of B.
Our Hong Kong Market Status are on a Rally Attempt.
From a technical perspective, the Hang Seng Index rebounded after hitting a bottom this week, shifting from a downtrend to a rally attempt, reclaiming the 17,000-point level. However, it faced resistance from the 200-DMA and ultimately failed to break above it. It is important to note that rebounds below the 200-DMA are often fragile, so caution is advised. In terms of trading volume, except for Monday when the volume significantly exceeded the 50-day moving average volume, the volume for the remaining four days was below this average, indicating some weakness in trading activity. Regarding the Southbound inflow via the HK-China Stock Connect, this week continued to see a net inflow, totaling HK$15.238 billion, a significant increase from last week, marking 26 consecutive weeks of net inflows. Given the market adjustments and uncertainty, investors should remain calm and avoid following the crowd blindly. It is recommended to 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 August 9, 2024