Following the "high-singing and fierce progress" during the National Day holiday, the Hong Kong stock market has entered a downtrend. On October 16th, the Hang Seng Index closed down by 0.16%, and the Hang Seng Technology Index fell by 1.09%. From October 7th to October 16th, the Hong Kong stock market experienced significant fluctuations, with the Hang Seng Index dropping by 10.78%, closing at 20,286.85 points. The Hang Seng Technology Index fell by 15.78%, closing at 4,402.37 points.
Song Qing, General Manager of the International Business Department of Noah Fund, stated in an interview with reporters that the capital market has a speculative nature. After a violent lift, it is not possible to rule out the emergence of a significant fluctuation scenario. Additionally, during the holiday, U.S. labor data exceeded expectations, providing new considerations for funds seeking safety and return rates. It is expected that changes in liquidity will still lead to extreme tugging phenomena. "The global process of de-dollarization is underway, and the Hong Kong stock market may synchronize with the mainland market after digesting recent favorable factors, moving towards a new upward trend," Song Qing said.
The short selling ratio is at a high level. According to data, as of October 7th, the year-to-date gains of the Hang Seng Index and Hang Seng Technology Index in the Hong Kong stock market reached 35.5% and 43.09%, respectively, significantly surpassing the gains of the S&P 500 (19.42%) and Nasdaq (19.4%) during the same period.
Specifically, from September 24th to September 30th, the Hang Seng Index and Hang Seng Technology Index rose by 15.82% and 28.49%, respectively. During the National Day holiday, on October 2nd, these two indices rose by 6.20% and 8.53%, respectively.
However, during the week of the Hong Kong stock market's decline (October 7th to October 11th), on October 8th, the Hong Kong stock market recorded the largest single-day drop since 2016, with the Hang Seng Index falling by more than 8%, almost erasing all the gains during the holiday.
In terms of trading volume, on October 8th, the Hong Kong stock market's transaction volume reached a new high of 620 billion Hong Kong dollars, "The phenomenon of low-position volume is conducive to the development of the market in the future." Song Qing said that on that night, the U.S. stock market and the prices of crude oil, gold, and other bulk commodities all fell sharply, indicating that funds are more inclined to prioritize safety, with returns as a secondary consideration. "Pockets are safe" has become a commonality among global investors.
"However, in the recent rebound, the nominal amount of short selling in the Hong Kong stock market is still rising," said Tao Xingyan, fund manager of West Lide Fund. The short selling ratio is at a high level of 17%-19%, while the average of this ratio in the six months before the policy adjustment was 13%. This also indicates that there is still a strong tug-of-war between bulls and bears. The pullback on October 8th was a market response to overbuying and high-position fluctuations during the holiday period, and further attention is needed in the future. There is no need to worry too much in the short term.
Huatai Securities' strategy team believes that the three factors contributing to the recent fluctuations in the Hong Kong stock market are: changes in policy expectations, marginal tightening of overseas liquidity, and rising geopolitical risks, with the first factor being the main cause. After the adjustment, the Hong Kong stock market may now be close to support, the most important factor being: from the perspective of policy expectations, corporate earnings expectations, and U.S. dollar liquidity expectations, the current domestic and international comprehensive environment is significantly better than in mid-June to mid-July, and the quantitative calculation shows that the current risk premium of the Hong Kong stock market is close to the level at that time. Looking forward, Huatai Securities believes that before early November, the Hong Kong stock market is likely to fluctuate in the current support area. The U.S. election, the third-quarter reports of listed companies, and policy verification, and other time-sensitive factors will still disturb, but the emotional release may have basically arrived.
Benefiting from the sharp rise in the Hong Kong stock market during the National Day holiday, the recent "recovery" of Hong Kong QDII has been significant. Data shows that as of October 15th, among the 101 QDII funds investing in the Hong Kong stock market, 82 have achieved positive returns this year, and all have achieved positive returns in the last month. Among them, the highest annual return is 33.69%, and there are 31 funds with annual returns exceeding 20%. The highest return in the last month is the Morgan Hang Seng Technology ETF (28.97%), and the lowest return is not low, reaching 8.07%.How do fund managers adjust their investment decisions to quickly adapt to the rapidly changing market conditions?
He Qi, the director of equity investment at Western Lide Fund, stated that the core ideas behind the recent adjustments were twofold: first, to be optimistic about upstream resource stocks in the context of the Federal Reserve's interest rate cut cycle, as many upstream resources are globally priced; second, to be optimistic about the domestic stimulus for domestic demand, given that the economy has certain structural pressures, and monetary and fiscal policies, as well as real estate policies, are expected to have marginal adjustment space.
Ping An Securities' strategy group issued a statement suggesting attention to three main lines: First, if the subsequent fiscal scale meets expectations, then sectors such as consumption, large finance (insurance, banking, securities), and real estate will directly benefit from the policy; second, the highly elastic internet sector, which is usually the most directly benefited from the continuous inflow of domestic and foreign capital, and the sector's mid-year report performance is excellent, with a focus on internet leaders; third, the biopharmaceutical sector, which has good growth potential and is sensitive to interest rates.
Hong Kong stocks are more volatile than A-shares.
In the medium to long term, Guolian Fund pointed out that with the continuous easing of domestic and foreign policy environments, the gradual recovery of the economy, and the warming of market sentiment, the Hong Kong stock market still has great potential. On one hand, if monetary and real estate policies continue to exert force, they are expected to provide support for the Hong Kong stock market. On the other hand, the market expects that the Federal Reserve may cut interest rates within the year, which will help improve the global liquidity environment and be beneficial to Hong Kong stocks.
"In the process of investing in the Hong Kong stock market, pay close attention to domestic and foreign policy environments, especially the Federal Reserve's interest rate cuts, as well as the introduction of domestic fiscal policies and the implementation of monetary policies. At the same time, compared with A-shares, Hong Kong stocks have greater volatility, and investors need to remain rational and not blindly follow the trend," said a person in charge of Guolian Fund.
Bi Mengxian, a researcher at Ge Shang Financial Management, said that Hong Kong stocks are currently being pulled by two forces: one is the favorable expectation of the Federal Reserve's interest rate cut, and the other is the bearish expectation of the weaker recovery of the domestic economy. From the perspective of capital, the interest rate cut expectation trade has already started. The Federal Reserve's interest rate cut in September has brought liquidity enhancement and denominator repair to Hong Kong stocks.
"From the perspective of fundamentals, whether the subsequent upward space can be further opened still depends on the repair of the domestic fundamentals and policy catalysts. The overall economy is still weak, with external demand better than internal demand, and there is still a large repair space," Bi Mengxian said. In general, in the short term, fluctuations in the external market may affect the sentiment of the Hong Kong stock market. Interest rate cuts may only affect the slope of the stock price, not the direction, and the decisive factor still lies in the fundamentals of China's economy.
Regarding the investment risks faced by investing in Hong Kong stocks at present, Bi Mengxian said that the risks faced by investors are mainly in the following aspects: First, market risk: The Hong Kong stock market is greatly affected by the fluctuations of the international market. Investors need to pay close attention to market dynamics and policy changes, as well as company performance and valuation, to avoid blindly following the trend or buying at high prices.
Second, exchange rate risk: Since the Hong Kong stock market is priced in Hong Kong dollars, exchange rate fluctuations may affect the Hong Kong stock market. Investors need to pay attention to the trend of exchange rates and assess their impact on the market.Third, policy risk: Changes in policies may have a significant impact on the Hong Kong stock market, and investors need to pay attention to policy dynamics and assess their impact on the market. At the same time, it is also important to pay attention to the regulatory environment and changes in regulations in the Hong Kong stock market.
Song Qing pointed out that as a platform connecting domestic and international markets, the Hong Kong stock market still has some characteristics in its mechanism, making it prone to violent fluctuations when encountering large inflows and outflows of funds. For example, individual stocks are not subject to price limits, and there have been cases where individual stock prices have fallen by 90% in a single day. Subsequently, geopolitical events or political factors may also bring fluctuations to the Hong Kong stock market. "However, on the whole, we believe that the Hong Kong stock market will synchronize with the A-share market, jointly reflecting the recovery and development of the economy, and embarking on a new trend," Song Qing said.
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