Over the last 3 days, we witnessed a near 9% rally for the HSI. There were several contributing factors - the Chinese government has injected more stimulus into the market. Read here and of course the 360 degrees turn by famous Jack Ma who bought 271 million shares of its own company, Alibaba, giving the much depressed stock a huge rally, causing a rising tide among the Chinese tech stocks like Tencent, etc.
On the weekly chart, we can see the price action on Monday has touched the 2009 year low at 14,588 price level. This is almost 60% down from its peak at 33, 472 in 2018. From a PE ratio perspective, Hong Kong remains the cheapest market and undervalued as well.
Of course, many analysts still refused to believe the stimulus will trickle down so fast to boost consumer confidence as these policies remain broad based and lack execution details. However, consumer sentiments are key and emotions are already running high for those who are holding stocks in the red for the last few years. Some will naturally want to offload to cut their losses while others like myself will find this a great opportunity to accumulate.
Many things remain unclear - the property market which contributes 1/3 of its country GDP, the escalating local government debts, high unemployment among 16-29 age group and the deflationary environment causing delayed spending (read here )
We can expect more clarity once the Feds start to cut its interest rates expected to be in March as this is the Election year. Joe Biden already helped many students to cancel their students loans (read here ) hoping to get more votes from this younger generation. I think he will have more goodies under his sleeves in the coming months to entice the population at large to garner a bigger winning vote which will naturally help shore up the US stock market.
Once US interest rates is lowered, I would expect RMB to start appreciating slowly as it has been on the reverse (depreciation) for almost 8% in 2023. All funds are flowing to US where they can get much higher interest thus the massive outflow of funds from China stock market.
China is moving from an investment led approach to one that relies more on consumption approach and that would takes time or years to see the impact and changes. The double digit growth that many has expected of China may be history and a much matured, tamer China will be showcasing its domestic strengths in time to come.
On the weekly chart, we can see the price action on Monday has touched the 2009 year low at 14,588 price level. This is almost 60% down from its peak at 33, 472 in 2018. From a PE ratio perspective, Hong Kong remains the cheapest market and undervalued as well.
Of course, many analysts still refused to believe the stimulus will trickle down so fast to boost consumer confidence as these policies remain broad based and lack execution details. However, consumer sentiments are key and emotions are already running high for those who are holding stocks in the red for the last few years. Some will naturally want to offload to cut their losses while others like myself will find this a great opportunity to accumulate.
Many things remain unclear - the property market which contributes 1/3 of its country GDP, the escalating local government debts, high unemployment among 16-29 age group and the deflationary environment causing delayed spending (read here )
We can expect more clarity once the Feds start to cut its interest rates expected to be in March as this is the Election year. Joe Biden already helped many students to cancel their students loans (read here ) hoping to get more votes from this younger generation. I think he will have more goodies under his sleeves in the coming months to entice the population at large to garner a bigger winning vote which will naturally help shore up the US stock market.
Once US interest rates is lowered, I would expect RMB to start appreciating slowly as it has been on the reverse (depreciation) for almost 8% in 2023. All funds are flowing to US where they can get much higher interest thus the massive outflow of funds from China stock market.
China is moving from an investment led approach to one that relies more on consumption approach and that would takes time or years to see the impact and changes. The double digit growth that many has expected of China may be history and a much matured, tamer China will be showcasing its domestic strengths in time to come.
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