Hang Seng fell 0.4%
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This week, the Hang Seng Index experienced a slight decline of 0.4%, while the Hang Seng Tech Index fell by 1.2%. The Hang Seng Index has now undergone adjustments for the fourth consecutive week, with the overall market displaying a volatile trend. From the news perspective, the influencing factors are mixed: the tense situation in the Middle East, the European Union’s imposition of anti-subsidy taxes on Chinese electric vehicles, the National Bureau of Statistics reporting that the PMI data for October has returned above the growth line, the launch of the AI assistant tool by the Chinese unicorn company Zhihua AI, which has boosted growth in the related mobile phone industry chain and SaaS businesses, and the China Iron and Steel Industry Association accelerating capacity governance and joint restructuring. Under the combined influence of these factors, the performance of various sectors has shown divergence, but the overall market sentiment remains relatively stable.
In the U.S. stock market, as of this Thursday, the S&P 500 index fell 1.8%, and the Nasdaq index dropped 2.3%, though it found support near the 50-DMA. Meanwhile, the Dow Jones index fell 0.8% and has dropped below its 50-DMA. On the macroeconomic front, data from the U.S. Department of Commerce showed that the preliminary estimate for the annualized q/q growth in real GDP for Q3 was 2.8%, below expectations and the previous value. Among the components, U.S. consumer spending in Q3 rose 3.7% q/q, marking the largest increase since Q2 of 2023. According to the Bureau of Economic Analysis, the PCE price index in September rose 2.1% y/y, in line with expectations and the lowest since early 2021, slightly above the Federal Reserve’s 2% target. The previous value was revised from 2.2% to 2.3%. m/m, the PCE price index rose 0.2%, meeting expectations but slightly above the prior month’s value. The core PCE price index for September rose 2.7% y/y, the same as the previous reading but higher than expectations, while the m/m core PCE rose 0.3%, meeting expectations and reaching the highest level since April this year. The previous value was revised from 0.1% to 0.2%. In employment data, the U.S. Bureau of Labor Statistics reported that JOLTS job openings fell to 7.443 million in September, the lowest since early 2021, with the previous figure revised from 8.04 million to 7.86 million. The ADP Research Institute, in collaboration with the Stanford Digital Economy Lab, reported that ADP employment rose by 233,000 in October, far exceeding the expected 111,000, with the prior reading at 143,000. Additionally, data from the U.S. Department of Labor showed that initial jobless claims for the week ending October 26 were 216,000, below both expectations and the prior reading, marking the third consecutive weekly decline and the lowest level since May.
The CSI 300 rose 0.8% this week, with trading volume slightly higher than last week and above the average level. The market is in an uptrend, with support at the October 18 low of 3765 and resistance at the October 8 high of 4450. On the macroeconomic front, data from the National Bureau of Statistics showed that profits of industrial enterprises above a designated size fell by 27.1% y/y in September. From January to September, these enterprises achieved total profits of 5.22816 trillion yuan, an increase of 575.43 billion yuan compared to January to August. However, due to factors such as insufficient effective demand, declining industrial product prices, and a notably higher base since August, the y/y figure decreased by 3.5%. Additionally, the PMI (Manufacturing Purchasing Managers’ Index) for October rose to 50.1%, up 0.3 percentage points from the previous month, marking the second consecutive monthly increase and entering expansion territory. The Non-Manufacturing Business Activity Index reached 50.2%, up 0.2 percentage points from the previous month, reflecting a slight improvement in non-manufacturing sector confidence. The Composite PMI Output Index reached 50.8%, rising by 0.4 percentage points from the previous month, indicating an accelerated pace of expansion in overall production and business activities among Chinese enterprises.
Leading stocks fell this week. The average stock in the MarketSmith Hong Kong 33 fell by 2.0% for this week. Our Hong Kong Model Portfolio rose by 0.7% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 585.0% vs. a 0.5% up for the Hang Seng.
The best performer in our Hong Kong 33 was YUE YUEN IND(00551), it’s the world’s largest manufacturer of major international branded athletic and casual footwear. The stock gained 6.4% this week. EPS rating stands at 99, RS rating of 93, and A/D rating of B.
Our Hong Kong Market Status are on an Confirmed Uptrend.
From a technical perspective, the Hang Seng Index continued its sideways consolidation trend this week, with trading volume further shrinking. On Friday, it managed to close above the 5-DMA. The current support level is at the low of October 17, 19977.3 points, while resistance is near the 21-DMA. Regarding the Southbound inflow via the HK-China Stock Connect, this week maintained a net inflow trend, totaling 15.191 billion HKD, which is half of last week’s amount. Next week will see significant events including the U.S. elections, the Federal Reserve meeting, and the National People’s Congress, with related matters and policy implementations likely to have a notable impact on the market. Overall, the current market faces considerable uncertainty, with a complex and volatile external environment. Various factors intertwine, making market trends unpredictable. Therefore, it is advisable for investors to remain calm, respond rationally, avoid blindly following trends, and focus on stocks that exceed earnings expectations and demonstrate strong technical performance.
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Notice: Information contained herein is not and should not be construed as an offer, solicitation, or recommendation to buy or sell securities. It is for educational purposes only.
published on November 1, 2024