To The Moon

I. Performance of Global Equity Indices (in US dollars)

Data source: Bloomberg, 2024/09/23-2024/09/29, compiled by Tiger Brokers

II. Key Market Themes

i. China's mainland has unleashed major economic stimulus measures, sparking a global scramble for Greater China assets. How should we view the subsequent market trends?

• This week, China's mainland has rolled out a series of major economic stimulus measures. On September 24th, the State Council Information Office of China held a press conference where the Governor of the People's Bank of China, the Director of the China Banking and Insurance Regulatory Commission, and the Chairman of the China Securities Regulatory Commission introduced the situation and answered questions from reporters.

• The policy intensity of this press conference far exceeded market expectations. It not only included classic measures such as interest rate cuts, reserve requirement ratio reductions, reduction of existing housing loan interest rates, and unification of the minimum down payment ratio for mortgages, but also introduced innovative tools such as "special re-lending for share buybacks and increases" and "mutual convenience for securities funds and insurance companies."

• Two days later, on September 26th, the Central Political Bureau meeting once again instilled confidence in the market. It called for "facing difficulties head-on and strengthening confidence," emphasizing the need to "promote the stabilization and recovery of the real estate market" and "to strive to boost the capital market."

• Affected by this, Greater China's assets took off sharply this week. The Shanghai Composite Index and the Hang Seng Index both rose by more than 12% in a single week, and the Hang Seng Technology Index even approached a 20% increase; in an instant, Greater China's assets became the hot potatoes globally. The founder of a famous hedge fund, David Tepper, publicly stated, "Buy everything China-Related."

• This week's capital market in Greater China can only be described as "frenzied." The Hang Seng Index rose by 13% in a single week, setting a record for the century; at the same time, the Hang Seng's weekly turnover was about 1.4 trillion, also breaking the second record since the beginning of this century. Statistics show that when the Hang Seng Index has a huge turnover, the returns are often average; when the returns take off, the trading volume is often insufficient. A situation like this week, where both huge volume and high prices appear at the same time, is also very rare in history.

Data source: Wind, compiled by Tiger Brokers

• Overall, the recent sharp rise in Hong Kong stocks, we believe, is due to "external + internal" factors:

1. External stimuli, which are also the main drivers of the current rise. On the one hand, it is a positive response to the unexpected economic stimulus policies of China's mainland; on the other hand, the strong peg relationship between the Hong Kong dollar and the US dollar, with the Federal Reserve having just started an unexpected interest rate cut cycle, has also positively stimulated the Hong Kong stock market;

2. Internal factors, Greater China's assets are really "too cheap"! After a week of soaring, the current PB of the Hang Seng Index is still only 1.14, but its corresponding ROE is not significantly lower than that of assets from other countries or regions, making the cost-performance ratio very obvious.

• So far, Greater China's assets are still in a state of emotional excitement. As prices continue to rise, short-term adjustments are inevitable. We believe that this policy stimulus is a very good starting point, and if subsequent policies continue to intensify and the effects can be verified, there may be a greater explosive space for Greater China's assets.

Data source: Bloomberg, compiled by Tiger Brokers

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