To The Moon

Short-Term Dips, Long-Term Gains: Why the Hang Seng's Pullback is a Buying Opportunity

This article is written by Shernice, if you like my article please hit the like button. 

$HSI(HSI)$ 

$Alibaba(BABA)$ 

$JD.com(JD)$ 

$iShares China Large-Cap ETF(FXI)$ 

$X HARVEST CSI 300(ASHR.UK)$  

Today, we’re witnessing a strong recovery in the Hang Seng Index, climbing back from a steep 6.1% drop to a more manageable 1.47% loss. Investors are seizing the chance to buy undervalued stocks, and this may be an ideal time to buy the dip. However, U.S. premarket action shows a deep red for Chinese stocks, which may cause some investors to panic-sell at discounted prices to institutional buyers. In times of high volatility, it might be wise to turn off your phone or laptop, take a break, and avoid getting caught up in the emotional swings of the market.

With the Hang Seng’s price-to-earnings ratio at just 11, compared to the S&P 500’s inflated 30, the Hong Kong and China markets are highly attractive alternatives. With Chinese markets reopening after their national holiday next Tuesday, we could see a surge of buying activity.

Today's pullback is a natural and healthy correction following 5 or 6 consecutive days of gains. Markets don’t rise in a straight line, but the potential upside, possibly as much as 50%, makes panic-selling unnecessary. Savvy value investors understand the strategy: buy strong companies when they’re undervalued and sell when they reach fair value. Stocks like Alibaba, JD, and Ping An Bank, ICBC are still trading at a discount, making them prime investment picks.

For those looking to hedge or diversify, ETFs such as FXI, MCHI, or ASHR provide broader exposure. Financial stocks, in particular, haven’t rallied much yet, while tech companies like JD and Alibaba offer promising upside potential.

Meanwhile, the U.S. market faces a wave of uncertainty, with recession fears, Middle East tensions, and upcoming elections adding to the mix. Labor market data revisions and shaky economic fundamentals point to trouble ahead, with a recession potentially triggering a market collapse.

In contrast, China’s growth potential looks bright. Consumer spending is set to rise, and Q3 results from Chinese tech and consumer companies are likely to be strong, with double-digit revenue growth expected by Q4. Alibaba, for instance, could see a 12-15% revenue increase by 2025.

In conclusion, the Hang Seng’s current dip presents a prime buying opportunity, while the overvalued U.S. market is ripe for profit-taking. Even Warren Buffett is holding cash, possibly waiting for a correction—perhaps even in the China market, setting the stage for a bull run.