HK - Market Strategy 03 (Dec 17 - Dec 25)

[winston]

Citi slashes HSI target by 3pc

Hong Kong's Hang Seng Index embraced its fifth day of drops in a row as China's producer price index fell for a 23rd month.

Citigroup cut its target for the Hang Seng Index by 3 percent to 19,800 points by the end of 2024.

Citi said the target was lowered due to reduced forecasts for corporate earnings, China's power demand and M2 growth.

Source: The Standard

https://www.thestandard.com.hk/section- ... get-by-3pc

[winston]

Stimulus will help stocks, says BNP

Hong Kong's stock market may pick up by 5 to 10 percent by the end of the year if the central government launches more policies to stimulate the economy, BNP Paribas estimates.

When the public and mainland banks benefit from supportive policies, market confidence can be elevated.

BNP Paribas lowered China's economic growth forecast for this year from 5.2 percent to 4.9 percent, which is still higher than the market expectation, due to China's slower-than-expected economic growth in the second quarter.

Credit rating agency Fitch predicts China's gross domestic product this year will be 4.8 percent compared to the government's goal of 5 percent, as the pace of growth may struggle to pick up for the rest of this year.

UBS Investment Bank maintained its forecast for China's exports to grow by 3.5 percent in 2024, but lowered its forecast for export growth from 3 percent to 1.5 percent in 2025.

It is because the country's external demand may weaken further that the annual growth rate of exports may be able to remain low in the short term.

Source: The Standard

https://www.thestandard.com.hk/section- ... ,-says-BNP

[winston]

Rally may cool off as equities overbought

The rally in Hong Kong stocks may slow and the market may even surrender some of its gains in the coming weeks as equities have been overbought and mainland investors will be absent over the seven-day National Holiday which kicks off tomorrow.

Surged for four days on the trot by 2,385 points to 20,632 points last week. The 13 percent surge took the HSI to levels last seen in mid-April 2023.

Turnover on the main board also hit a record high of HK$445 billion.

Source: The Standard

https://www.thestandard.com.hk/section- ... overbought

[behappyalways]

Hong Kong Crashes As China's Stimulus Frenzy Ends With A Bang
https://www.zerohedge.com/markets/hong- ... -ends-bang

[winston]

G Sachs: Hedge Funds Dump CN Equities on Tue on Record Scale

The stock market of Mainland China reopened on Tuesday (8th) after the long National Day holiday, a Goldman Sachs trader said in its report.

Owing to the lack of more major stimulus measures, hedge funds sold off Chinese stocks on a record scale.

Hedge funds not only reduced long positions, but also increased short positions, with long sells being double the amount of short sells.

Related News: HSBC Global Research Upgrades CN Mkt to Overweight; Valuations Still Attractive, Not Too Late to Enter

The CSI 300 Index opened 11% higher on Tuesday, before giving up some of those gains and ultimately closing up 5.9%.

The HSI closed the day at 20,926, down 2,172 pts or 9.4%.

The report said that three-quarters of the hedge fund sell-off came from A-shares, with the rest from Hong Kong-listed stocks.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

Sobering outlook for Hong Kong stocks

Officials did not provide details on the size or timing of fiscal stimulus being prepared.

Source: Reuters

https://www.thestandard.com.hk/section- ... ong-stocks

[winston]

Outlook:

In early-October, the Hang Seng Index achieved a yearly peak of around 23,200 points, marking a notable cumulative surge of 9.3% within this month.

However, the HSI retraced from this peak last week and sought support at the psychological threshold of 20,000 points.

The weekly RSI descended from the overbought level, positioning itself above the mid-line of 50.

As momentum gradually stabilises, the HSI is expected to continue with the volatile sideways movement, maintaining a neutral outlook.

Strategy: A significant support level has been identified at the gap-up opening near 19,900 points, indicating that the HSI is likely to fluctuate within the range of 19,900 to 23,200 points.

Accordingly, investors are advised to consider maintaining their current holdings while exploring the addition of trending stocks to their portfolios for the purpose of momentum trading.

Support: 19,900pt Resistance: 22,700pt / 23,200pt

[winston]

HK Strategy: Policy Address outlining comprehensive measures

The Hong Kong Special Administrative Region (HKSAR) Chief Executive delivered a Policy Address yesterday, announcing measures and policies to support near-term growth and enhance longer-term development.

Aside from further easing measures on the real estate market, other key measures announced focused on attracting talents, infrastructure development, promoting technology development and tourism, enhancing the small and medium enterprises (SME) financing guarantee scheme, and enhancing social welfare.

Given that the market did not have many expectations, we believe the real estate-related measures would be a mild positive, especially the further loosening of loan-to-value (LTV) ratio and the expansion of the New Capital Investment Entrant Scheme.

Overall, the removal could lift sentiment but the impact on the overall residential market could be marginal.

First, the incremental beneficiaries of further LTV ratio loosening are properties valued at or above HKD30m. Transactions in this segment account for less than 3% (in terms of volume) of total transactions. As such, the impact on end-user demand and overall transaction volume are likely to be limited.

Second, while the loosening of the LTV for non-self-use residential properties could potentially stimulate investment demand, we believe the near-term impact will be limited on the back of negative carry.

We are Neutral on the HK real estate market and our pecking order within the sub-segments is residential and then retail, with office being the least preferred.

We believe property developers with luxury projects would benefit, such as, Sun Hung Kai Properties (16 HK) which has three new residential projects with units priced at HKD50m or more.

The real estate related measures and the SMEs financing guarantee scheme enhancement will be an incremental positive for HK banks, especially HK domestic banks, to manage asset quality risk and should help lower potential expected credit losses (ECL).

Source: OCBC

[winston]

<Research>CICC: H-shr Mkt May Continue to Consolidate at Current Lv., but to Show Strong Resilience

CICC released a research report believing that the H-share market may continue to consolidate at the current level, while waiting for new policies and changes after the US presidential election.

The broker also believed that the H-share market may be more vulnerable than the A-share market to the impact of the tariff policies in the short term, as sentiment and liquidity conditions in the H-share market are more sensitive to changes in overseas markets.

However, CICC saw no need to be over-worried.

First, external pressure may lead to emergent stimulus measures.

Second, no strong stimulus measures are expected if there are no shocks, in which case the H-share market may continue to consolidate, but will show strong resilience under a favorable sector structure.

Source: AAStocks Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN

[winston]

Stocks to struggle despite stimuli, monetary easing

by Themis Qi

Last Friday, China's Standing Committee of the National People's Congress said it would raise the quota of swapping local government debts by 6 trillion yuan and allow the local government to use 800 billion yuan each year for five years from the special bonds, largely matching market estimates.

Source: The Standard

https://www.thestandard.com.hk/section- ... ary-easing