HONGHAO

    • HONGHAOHONGHAO
      ·11-22

      Hao Hong | Outlook 2023: A Cyclical Recovery

      Key Takeaways China finetuning “COVID-Zero”; flames of “Dual Circulation” turning blue. The Chinese authority is finetuning “COVID-0”, at a juncture when negative exports growth for the first time in 29 months and negative retail growth are suggesting receding demand both home and abroad. Yet onshore market rebounded strongly – from a similar level last seen at the onset of COVID in Mar 2020 China’s export cycle, an intermediate economic cycle running every seven years, has peaked in Feb 2021, and has translated to slowing accumulation of current account surplus compared with GDP. The export cycle correlates closely with China’s stock market cycle via the liquidity created via its export cycle. Thus, a peaking export cycle argues against a “secular bull market” suggested by consensus. Economic cycle near turning point, but arduous property recovery likely. The short cycle as measured by the property investment cycle, however, is nearing its turning point, but still needs a ca
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      Hao Hong | Outlook 2023: A Cyclical Recovery
    • HONGHAOHONGHAO
      ·03-30

      U.S. Treasury Yield Curve Inverted: Recession Comfirmed?

      The widely tracked U.S. 2-year/10-year Treasury yield curve briefly inverted on Tuesday for the first time since September 2019, Every U.S. 2s/10s Treasury yield curve inverts in history has signaled a recession. However, every time the economist explained, " it is different than previous". Below are how Fed experts explain "it is different than previous" after the U.S. Treasury yield curve inverted over the past three decades: 1. The 1990 Recession | Greenspan Greenspan, former FED chairman, February 1989 commented: I take great comfort in the yield curve and what it says about the Fed's credit. What does it look forward to? What does it tell us about the future? I'm not sure if this is really the case. The yield curve in the U.S. and elsewhere is not a reliable indicator of future inflation, and most recessions are caused by inflation. I wouldn't bet on it like that. So I don't think an inverted yield curve is telling us anything important. 2) Recession of 2000 | Greenspan In Februar
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      U.S. Treasury Yield Curve Inverted: Recession Comfirmed?
    • HONGHAOHONGHAO
      ·03-22

      An Oversold Reprieve: How Far will it Go?

      “When all the dreams drain, same are loss and gain.” – The Romance of Three KingdomsKey Points- Hong Kong’s selloff and reversal last week were epic, but onshore less so.- Short sellers onshore are wrongfully blamed, as they have been cutting positions. Net long on margin peaked with the onshore market around mid 2021, and had since entered a deleveraging phase. It will still weigh on indices.- An onshore leverage cycle is typically ~3 years, consistent with the wavelength of 3 to 4 years in our theory of China’s economic cycle.- On October 20, 2018, there was a meeting at the Committee of Financial stability and Development. The onshore market eventually bottomed out in early January 2019. It will take more than a meeting and a phone call to end this bear. A second low is likely. But such likelihood is less perceptible now, as the market gets swayed by the near-term momentum.- Our trading range forecast of the Shanghai Composite continues to holdbetween slightly below 3,200 and slight
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      An Oversold Reprieve: How Far will it Go?
    • HONGHAOHONGHAO
      ·03-16

      Another Technical Reprieve: Who Is Selling?

      “The History of markets is one of overreaction in both directions.” – Peter BernsteinKey Points:- Record short volume and put buying will be fuel to violent technical reprieve.- With the first Fed hike in sight, the HKMA’s less aggressive balance sheet trimming can help improve market visibility.- Hong Kong is mired in deep allocation value. If without a US recession, the Hang Seng will recover swiftly; if not, then the Hang Seng can still have a technical reprieve before making a second low.- Trade safe and good luck.China released mysteriously strong economic activities data yesterday. But the US-listed Chinese stocks plunged another 10% on the previous night, bringing the total loss to close to 30% in three short days. Such capitulation in the US market rippled through to Hong Kong, a small open economy. The trading floor is rife with casualties.The Hang Seng reversed most of its early morning loss after the surprisingly release, and the Hang Seng Tech (HSTECH) more t
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      Another Technical Reprieve: Who Is Selling?
    • HONGHAOHONGHAO
      ·03-16

      Six Charts Showing You The Ides of March

      Key Points- Selling in Hong Kong at one of its worst. Indiscriminate selling by institutional and individual investors. Pessimism will take time to dissipate, the Hang Seng will take time to bottom. Fleeting technical rebound will be difficult to trade.- Onshore market is no better. Foreign investors are reducing Chinese treasury. Onshore funds’ equity allocation uncomfortably high, and inconsistent with COVID resurgence, potential US sanctions and disappointing February credit growth. Be aware of contagion. The PBoC will act accordingly.- BUT forward points on the HKD suggest long-term confidence. Difficult case against HFCAA means accelerated return of US listed Chinese stocks. It will drain liquidity in Hong Kong near term, but China’s finest will eventually prove well worth it.February monetary stats onlyhalf of expectation.Last Friday’s trading was memorable. But it was not only because of the Shanghai Composite’s (SHCOMP) V-shaped reversal intraday, and continued bounce from
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      Six Charts Showing You The Ides of March
    • HONGHAOHONGHAO
      ·03-10

      A Technical Reprieve: Give Peace a Chance | A & HK Share Strategy

      Key Points:  - The Shanghai Composite staged a dramatic intra-day reversal right at its 850day moving average, an important secular market trend line moving in tandem with China’s economic short cycle. - The nadir of the Shanghai Composite during yesterday’s trading was at 3,157; the peak last December was 3,709. This range is consistent with our forecast trading range of between just below 3,800 and just below 3,200 laid out in our 2022 outlook last November. - China’s market is going through a growth scare. The positive news from Ukraine helps. For now, we should have a technical reprieve from these technically significant levels.   The Shanghai Composite staged a dramatic intra-day reversal yesterday. The reversal happened as suddenly as the plunge right after the trading lunch break. After lunch, the SHCOMP plunged almost 5% from its intraday peak before recovering, and the CSI All-A index tumbled even more by more than 5% at its steepest decline. Traders were dumbfo
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      A Technical Reprieve: Give Peace a Chance | A & HK Share Strategy
    • HONGHAOHONGHAO
      ·03-09

      Americans & Europeans are paying for energy sanctions

      Last night, the United States unilaterally announced sanctions on Russia's energy exports, and crude oil returned to around 130 again. Europe has not made a statement. After all, 80% of Russia's oil is exported to Europe and China, while the United States has less than 10%. The roughly one million barrels of crude that Russia exports to the U.S. is roughly 5 percent of what the U.S. consumes every day, which the U.S., one of the biggest producers, can easily make up for. However, the American people are not so lucky and have to pay for energy sanctions. Now that gasoline prices at U.S. gas stations have soared to more than a decade high, diesel is even more expensive. Europeans are even worse off. Natural gas futures prices in the Netherlands have soared 11 times in a year. Natural gas futures in Japan and South Korea soared eightfold. Sanctions can get the name of benevolence and righteousness, but let the common people bear the cost of sanctions, Sima Zhao's heart. When the sanctions
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      Americans & Europeans are paying for energy sanctions
    • HONGHAOHONGHAO
      ·03-09

      Schrodinger's nuclear bomb suggests that near-term risk skews deeply negative

      “Don’t wait for the last judgement. It comes every day.” – Albert CamusKey Points:-The Twin Sessions set ambitious growth target and fiscal expansion. But China’s macro leverage will likely stay steady, and the onshore market will stagnate.-Every oil crisis or oil price surge is followed by a US recession.-RMB strength explains the divergence between on- and off-shore markets in 2021. But the Hang Seng has outperformed CSI300 YTD by 2x.-Schrödinger’s nuclear bomb suggests that near-term risk skews deeply negative.The "Twin Sessions"The all-important “Twin Sessions” are still proceeding. Many were surprised by the 5.5% GDP growth target set for 2022, but with a lower budget deficit than 2021. It is at the top end of consensus forecast, and well above the IMF’s estimate of below 5%. The sessions have set an ambitious target amid historic oil and bond volatility globally. No doubt it will be a challenging environment, especially in the near term. In times like this, it pays to set a targe
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      Schrodinger's nuclear bomb suggests that near-term risk skews deeply negative
    • HONGHAOHONGHAO
      ·03-08

      The War and the Oil Surge vs. A New World Monetary Order

      On March 4, BZ topped 115 as Russian forces gradually encircled southern cities of Ukraine. Crude oil traders rushed to cancel their short orders. A large number of short sellers have gathered in this price range. The withdrawal of these short orders and upcoming long orders are likely to lead to a further spike in oil prices. The U.S. announced 60 million barrels of crude oil will be released. But it only equals to 3-4 days of US consumption, and wartime is likely to consume more oil. With crude oil inventory data well below market forecasts, crude oil futures logically present a super-backwardation structure. It means that traders have no confidence in the short-term market supply balance. In fact, not only crude oil futures, but also other major commodity futures are starting to exhibit a similar structure. The proportion of commodity futures with super-backwardation structure is at one of the highest levels on record. Since last November, I have repeatedly highlighted the continued
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      The War and the Oil Surge vs. A New World Monetary Order
    • HONGHAOHONGHAO
      ·03-01

      How the Russian-Ukraine War Will Affect the Chinese Stock Market

      The real tragedy is when two powers meet. As the war rages on in Ukraine, a great chasm has erupted on the Chinese social media. The confusion brought by news from various unverified sources behind the wall threw fuel into the online fire. Amid such a cacophony of how the sanctions on Russia would be applied and what its scope would be, the weekend stock market in the heads of pundits has been rollercoastering through limit-ups and downs. Such commotions online suggest that traders may have plunged back into stocks, probably lured by the epic intraday reversal in the US market last Thursday night. The trading volume on Friday once again surged to well over one trillion yuan. With new developments on the frontline over the weekend, where are China markets heading in the coming weeks? Next week will be the important “Two Sessions”, during which the government will likely set the growth target for 2022 to be just above 5%. We should hear more on plans of important projects, updates on inf
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      How the Russian-Ukraine War Will Affect the Chinese Stock Market
       
       
       
       

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