On May 19, the US sovereign credit rating was downgraded by Moody's, is the most affected again the Hong Kong stocks?
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There are quite a few news over the weekend, overall bearish, the most noteworthy is Moody's downgrade of the US sovereign credit rating. Although it seems to have no direct relation to us, looking back at the two historical instances, the impact was significant.
1. In 2011, S&P downgraded the US rating. On August 5, 2011, S&P downgraded the US long-term sovereign credit rating from AAA to AA+, marking the first time in US history losing the AAA rating.
Hang Seng Index performance, pre-adjustment trend: From May to July 2011, the Hang Seng Index was in a sideways consolidation state, with the bottom range around 21,700 points.
Post-adjustment trend: Affected by the downgrade and the rise in global risk aversion sentiment, the Hang Seng Index fell rapidly, reaching a low of 16,170 points on October 4, 2011, with a maximum drop of about 25.5%, approximately 5,500 points within two months.
Background factors: Concurrently, the worsening European debt crisis and concerns about global economic growth amplified market panic, increasing the drop.
2. In 2023, Fitch downgraded the US rating. On August 1, 2023, Fitch downgraded the US long-term sovereign credit rating from AAA to AA+, citing high government debt, weakened fiscal governance, and political polarization.
Hang Seng Index performance, pre-adjustment trend: From May to July 2023, the Hang Seng Index was in a post-rebound sideways range, with the top around 20,300 points.
Post-adjustment trend: The Hang Seng Index began a volatile downward trend, reaching a low of 14,794 points on December 20, 2023, with a maximum drop of about 27.3%, approximately 5,600 points within five and a half months.
Background factors:
Affected by multiple factors such as the slowdown in China's economic recovery, repeated expectations of Fed rate hikes, and geopolitical issues, market sentiment was sluggish.
Of course, the market background of different periods also needs to be considered. The background in 2011 was the European debt crisis, and in 2023, the pressure of China's economic transformation. Although the US-China tariff war in 2025 has somewhat eased, conflicts at various levels between the two sides have not decreased. If deterioration occurs, market risks still exist. Historical patterns may not fully repeat, and currently, the previous transmission logic does not seem to appear this time, but we must remain vigilant.
Today, the Hang Seng Index is focused on 23,000 points.$Hang Seng Index(00HSI.HK)
The best short-term operation is to hold a light position, hedge appropriately, and remain on the sidelines.$Hang Seng TECH Index(STECH.HK)
$BABA-W(09988.HK) $TENCENT(00700.HK) $MEITUAN(03690.HK) $XIAOMI-W(01810.HK) $SMIC(00981.HK) $BYD COMPANY(01211.HK) $JD-SW(09618.HK) $GEELY AUTO(00175.HK) $HSBC HOLDINGS(00005.HK) $PING AN(02318.HK)
$Dow Jones Industrial Average(.DJI.US)
$S&P 500(.SPX.US)
$NASDAQ Composite Index(.IXIC.US)
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