To The Moon

The stock market has been volatile lately, with ups and downs affecting investors' confidence. However, in the past week, there has been a rebound in the market. This has resulted in a return on investments of up to 14.3%, with the amount increasing to over HKD 2.5 million. There is a hope of reaching HKD 3 million by the end of the year, which would be very satisfactory. Of course, this is highly dependent on the performance of the market and the stocks in the portfolio.

The Hang Seng Index, which rose from around 14,500 points to a high of 22,600-22,700 points in the past wave, experienced a decline of about 3,000 points, which is about 38% of the rally. This happened as many people had predicted. However, it was surprising that the market indeed bottomed out at around 19,600 points, which was a drop of about 3,000 points. It is consistent with the logic of many market analysts. Whether it was due to human intervention or not, the news of the market bottoming out came from the February PMI data of China, which was better than expected, especially the PMI of the service sector, which was above 55 and in the expansion phase. It was also better than the January data, which indicates that the economic recovery is currently in good shape.

As previously mentioned, one of the reasons for the market correction in February was concerns about the recovery path of the Chinese economy.

However, the data shows that both the real estate and service sectors are doing well. While real estate sales have not improved significantly, they have narrowed compared to the same period last year, and there is a chance that they will stop falling on a year-on-year basis starting from Q2. Overall, the theme of investing in the Chinese economic recovery remains unproven this year, and therefore, the stock market is still rising.

In the future, investors in the Hong Kong stock market will need to watch these data closely to make investment decisions, much like how investors in the US stock market watch the CPI data. If Chinese data shows a significant downturn for a month, investors should be cautious and even exit early to observe the situation, as there may be no hope of recovery. If you remember, after China closed down its cities in March last year, it implemented a series of market rescue measures, and the economic data for May and June was very good. The stock market also rebounded.

However, from July onwards, the data significantly deteriorated, and the stock market began to fall. Finally, the data for August, September, and October was not good, coupled with containment measures, which led to poor economic data, and the stock market naturally fell into the abyss.

In my opinion, the market has already bottomed out. If the Hong Kong stock market does not fall below 20,000 points in the next few weeks, it can be confirmed that the market has bottomed out. I am currently fully invested and waiting for the market to rise again to 22,000 points before considering taking profits.

We will be discussing the performance of one particular stock, 6098 Country Garden Services, which issued a profit warning last week. While the company is a leader in property management, its net profits for shareholders have declined by 51-57%. This is largely due to a decrease in revenue and profit in the second half of 2022, which can be attributed to issues faced by Country Garden and the ongoing pandemic.

As an investor, it is important to understand the reasons behind the decline in net profits. One of the primary reasons is the company's acquisitions in previous years, which have led to a need for write-downs in the current market conditions. However, it is important to note that this is not an isolated case, and other similar companies like 1516 Rongsheng Services, 873 Shimao Services, and 3319 Yajule Service may also face varying degrees of write-downs.

Despite this setback, the worst times for the property management industry have passed. As investors, we must focus on the future and invest based on expectations. The poor performance of last year has already been reflected in the stock prices, and unless there is another significant downturn in the Chinese real estate market, it is unlikely that events like this will occur again in 2023 or beyond.

Moving on to the US stock market, there is currently little to share in terms of major developments. However, it is important to note that the market is in a state of chaos as it struggles to reconcile the conflicting long-term factors that influence stock performance.

On one hand, there are positive factors such as the expected peak of inflation and interest rates this year, as well as the potential for a soft economic landing in the US. On the other hand, negative factors such as slow inflation decline and prolonged high-interest environments, along with the risk of a recession, continue to pose a threat.

While these factors seem contradictory, they are all part of the market's overall confusion. For example, higher-than-expected inflation data can cause a significant drop in the market, but a positive economic outlook can be interpreted as a sign that the US is not headed for a recession, or that high-interest rates will continue.

Overall, the market is in a state of uncertainty, and it will take time to see which factors will ultimately dominate. However, I personally believe that the second half of 2023 will be a turning point, as we may see a significant downturn in the US economy or a peak in interest rates at 5-5.5%.

As an investor, I would recommend investing in the US stock market in the second half of 2023. While there is a certain amount of risk involved, the long-term opportunities for growth and profit are significant.

$HSI(HSI)$ 

$DJIA(.DJI)$ 

$S&P 500(.SPX)$ 

$NASDAQ(.IXIC)$ 

@TigerStars @Daily_Discussion @MillionaireTiger @CaptainTiger @VideoLounge @MaverickTiger