Gf Securities Co.,Ltd. released a research report stating that concerns over hawkish statements from the new Fed Chair regarding the rate-cut path are unnecessary. Previously, the most likely candidate for the position, Hassett, saw his election probability plummet from 78% to 54% after making hawkish remarks on rate cuts, indicating market expectations for a more dovish Fed Chair. In Trump's view, "compliance" outweighs "expertise." Therefore, regardless of who becomes the next Fed Chair, the likelihood of an extremely hawkish stance on rate cuts is low. This year's Hong Kong stock market spring rally is unlikely to be absent and may even be stronger than expected due to loose liquidity or an influx of incremental capital exceeding expectations.
Key points from Gf Securities' report are as follows: The timing of the Hong Kong stock market's spring rally (from before Christmas to before the Lunar New Year) differs significantly from that of the A-share market (post-Lunar New Year to the Two Sessions period). Over the past 15 years, the Hang Seng Tech Index and the Hang Seng Index have recorded positive returns during the spring rally 72.7% and 80.0% of the time, respectively, with median gains of 6.3% and 4.7%, and average gains of 4.7% and 3.8%.
The "Santa Claus rally" phenomenon lacks a definitive explanation, but its historically high success rate—81% for the S&P 500 over the past 97 years and 77% for the Hang Seng Index over the past 59 years—has reinforced investor expectations. Supported by quantitative capital, this seasonal pattern often creates a self-fulfilling momentum effect.
One way to enhance returns is by participating in the Hong Kong stock market's spring rally. Although the Hang Seng Index remains far from its previous highs, the rally's historically high success rate means that any strategy focused on investing during this period would have been profitable if held to the present.
When has the Hong Kong spring rally failed or been delayed? - In 2014, it was absent due to overseas liquidity shocks. - In 2016 and 2024, risk events (such as circuit breakers & the expiration of share sale restrictions in 2016, and snowball product knock-ins & DMA liquidations in 2024) delayed the rally until after the Lunar New Year.
When has the rally been particularly strong? 1. When liquidity was loose or incremental capital exceeded expectations (e.g., 2021, 2023). 2. When short-term macroeconomic data or corporate earnings outperformed (e.g., 2017, 2019).
Will this year's spring rally fail? Current liquidity concerns include: 1. **Unwinding of Japanese carry trades**: No need for excessive worry. Market expectations for a BOJ rate hike and Fed rate cuts are well-priced, and carry trade positions have already shrunk significantly, making a severe liquidity shock unlikely. 2. **Hong Kong stock lock-up expirations**: The peak has passed, with pressure easing. December saw HKD 126 billion in restricted shares unlocked, while January's figure is expected to drop below HKD 50 billion. 3. **Hawkish Fed Chair statements on rate cuts**: As mentioned earlier, market expectations lean dovish, reducing the likelihood of extreme hawkishness.
Looking ahead, developments in DeepSeek's models and domestic internet giants' consumer-facing applications in early 2025 may provide positive catalysts for the Hang Seng Tech Index's fundamentals.
**Risks**: Geopolitical tensions, overseas inflation risks, and weaker-than-expected domestic growth policies.
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