Hong Kong stocks daily average turnover is only tens of billions of Hong Kong dollars. Institutions: the market downturn indicates greater downward pressure!
Analysts believe that the breadth of the Hong Kong stock market has significantly deteriorated, indicating greater downward pressure for adjustment.
Source: Cailian Press
The Hong Kong stock market opened high and fell last week. The time when the lagging brokerage stocks chased the rise was also the peak of the estimated mood. The Hang Seng Index fell for four consecutive days after rising last Monday, down 2.1% for the week, closing at 19,627 points. The GEM index reversed its weakness of lagging behind the Hang Seng Index before, only falling 0.5% for the week, closing at 3,874 points.
The daily average turnover of the market was only over HKD 105.7 billion, and the net inflow of the Hong Kong stock market was only HKD 4.047 billion for the whole week. The market sentiment was still relatively low. Although the Hong Kong stock market finally fell slightly by 0.6% on Friday with the support of heavyweight technology stocks such as Alibaba (9988 HK), JD.com (9618 HK), and BIDU-SW (9888 HK), the market breadth was obviously worse, indicating greater downward pressure.
In April, mainland China's price and credit data were lower than market expectations. The negative scissor difference between M1-M2 slightly narrowed to 7.1%, and the M2-social financing scissor difference fell to 2.4%. Although the situation of monetary stagnation has improved, both are still at historical highs, indicating that the economic vitality is not high and the endogenous demand is insufficient.
Due to the focus of policies on medium- and long-term structural reforms, the opportunity for short-term incremental policies is not high. If the two-year average growth rate of social retail, industrial production, fixed investment, and other data released this week excluding the base effect is lower than market expectations, it will increase the pressure of downward revision of Hong Kong stock profit forecasts.
US inflation continued to decline in April, with overall CPI up 4.9% year-on-year, in line with expectations; core CPI up 5.5% year-on-year and up 0.4% month-on-month, both in line with expectations. The overall US inflation has been declining for 10 consecutive months, and the sticky rent has seen a turning point. The upstream PPI also accelerated its decline, indicating that the downstream CPI will continue to decline.
However, the growth rate of US residents' wages is still high, which may affect the downward pace of core inflation, but this cannot change the trend of the 10-year US bond yield and the US dollar index peaking and falling at the end of last year. However, although the interest rate hike cycle has come to an end, there is doubt about whether the US dollar index will break through and fall in the short term. The benchmark situation is expected to rebound.
Mainly 1) if the bank crisis does not deepen the speed of the US economic downturn, the optimistic interest rate cut expectation will eventually be revised; 2) it is expected that the US dollar interest rate will remain high for a long time, the Federal Reserve will continue to shrink its balance sheet, and shrink the US dollar liquidity; 3) the negotiation of the US debt ceiling may increase the market's risk aversion. On the other hand, if the US economy eventually enters a recession, the Federal Reserve cuts interest rates, and the US dollar index is not necessarily weak. The US dollar index will have a sharp rise caused by the return of safe-haven funds every time a recession is approaching. Therefore, the Hong Kong stock market will still face the constraint of insufficient US dollar liquidity in the next one or two years.
Overall, Zhongtai International expects the Hong Kong stock market to continue to oscillate at the bottom in the short term, with a volatility range of around 19,000 to 20,500 points. If the momentum of mainland China's economic recovery does not improve significantly, or overseas liquidity does not show a turning point, funds will still revolve around defensive stocks with high interest rates and low valuations. The valuations of leading technology stocks are attractive, and TENCENT (700 HK), JD.com (9618 HK), and Alibaba (9988 HK) have successively announced their latest quarterly results, which may become a catalyst for stock price rebound.