To The Moon

Within just three trading days in 2023, Hong Kong stocks have risen for three days in a row and the Hang Seng Technology Index has hit a new high in half a year!

From what I observed, the main reason for the recent rise in Hong Kong stocks seems to be the favourable policy news for the technology sector, especially for Internet stocks. With weak external demand and insufficient domestic demand recovery momentum, investors are still looking out for follow-up policy support measures, and will be one of the main reasons for short-term positive sentiments.

Hong Kong stocks are still in the early stages of a reversal trend. Moreover, the current domestic economic data has not improved yet, and the Hang Seng Index EPS has not yet seen a significant upward revision. Moreover, after the recent rebound, the Hang Seng Index is becoming less attractive compared to the bond market. So, the big question mark is: is this a dead cat bounce or the start of a permanent bull rally?

I have no answer either. Haha!

However, there could be 3 possible drivers that may continue to drive the share price in the short to medium term:

1. Positive policies continue to be implemented, leading to an increase in risk appetite. Factors that may discourage investor confidence in the market may gradually decrease, and risk appetite in Hong Kong stocks is expected to continue to increase.

2. U.S. inflation become more subdued and interest rate expectation softened. This will promote the further restoration of the Hong Kong stock denominator.

3. Earnings of Hong Kong stocks exceed or match expectation. This will lead to an upward revision of Hong Kong stocks' profit expectations. Further improvement of fundamentals and the fulfillment of performance expectations will form a positive cycle of improved fundamentals, performance fulfillment, and further strengthening of expectations.

Ultimately, situation can change rapidly so its prudent for us to be selective in our investment choice and invest in high quality companies that can withstand any market turbulence. 

@TigerStars @Daily_Discussion