Hang Seng fell 1.1%
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This week, the Hong Kong stock market showed a trend of gradual stabilization after shock adjustment, with the Hang Seng index falling 1.1% and the Hang Seng technology index falling 2.6%. At the beginning of the week, the Hong Kong stock market was affected by the sharp fluctuations in U.S. stocks, worries about the U.S. economic recession and geopolitical risks, and there was a significant shock adjustment in the market. Subsequently, with the strengthening of the trend of “rising in the East and falling in the west”, the enhancement of favorable expectations of Chinese policies and the strong support of capital returning to the Asian market, market sentiment recovered significantly in the second half of the week. Especially on Friday, Hong Kong stocks and the A-share market formed a linkage rise, gradually recovering lost ground.
In the US stock market, as of Thursday, the S&P 500 index fell by 4.3%, the Nasdaq index dropped by 4.9%, and the Dow Jones index also declined by 4.7%, with all three indices falling below their 200-DMA. The recent sharp decline in US stocks is mainly due to heightened expectations of an economic recession, concerns over tariff issues, and a weakening technical outlook in the stock market. Additionally, factors such as a repricing of AI themes, systematic selling by hedge funds, and reduced liquidity have also played a role. From a macro perspective, data from the U.S. Bureau of Labor Statistics shows that in February 2025, the CPI increased by 2.8% y/y, which was lower than both expectations and the previous value, marking a new low since November 2024; on a m/m basis, it rose by 0.2%, the lowest level since October 2024. Core CPI rose by 3.1% y/y, also lower than both expectations and the previous value, representing the smallest increase since April 2021; on a m/m basis, it increased by 0.2%, the smallest gain since December 2024. The PPI increased by 3.2% y/y, which was also below both expectations and the previous value; on a m/m basis, it remained unchanged, also below expectations and the previous value, marking the smallest increase since July 2024. Core PPI increased by 3.4% y/y, below both expectations and the previous value; on a m/m basis, it fell by 0.1%, again lower than both expectations and the previous value. On the employment front, a report from the U.S. Bureau of Labor Statistics showed that in January, JOLTS job openings reached 7.74 million, higher than expected, with the December 2024 figure revised from 7.60 million to 7.51 million. Additionally, in February, nonfarm payroll employment increased by 151,000, below expectations, with the previous figure also revised from 143,000 to 125,000. For the week of March 8, initial jobless claims were 220,000, lower than both expectations and the previous value, which had been revised from 221,000 to 222,000. As of the week of February 22, continuing jobless claims were 1.87 million, lower than the previous value. In other developments, the trade war situation escalated, with Trump threatening to impose tariffs of up to 200% on EU alcoholic beverages; at the same time, starting on March 12, the United States began imposing a 25% tariff on all imported steel and aluminum, and an additional 25% tariff on steel and aluminum products imported from Canada.
the CSI 300 index rose 1.6% this week, successfully breaking through the 4,000-point round number. In terms of trading volume, only Friday’s daily volume exceeded the 50-day average; the weekly volume was slightly lower than last week but slightly higher than the 10-week average. The market is currently in a Confirmed Uptrend. Support is located at the 100-day moving average, with secondary support at the 50-DMA; resistance is at the high of 4098.38 recorded on December 10, 2024. On the macro side, data from the National Bureau of Statistics shows that in February, the Consumer Price Index (CPI) fell 0.2% m/m and 0.7% y/y; the Producer Price Index (PPI) declined 0.1% m/m and 2.2% y/y. This was mainly influenced by factors such as the shifting of the Spring Festival calendar, holidays, and fluctuations in the prices of certain international bulk commodities. In terms of gold and foreign exchange, data from the State Administration of Foreign Exchange indicates that at the end of February, China’s gold reserves stood at 73.61 million ounces, up from 73.45 million ounces at the end of January, a m/m increase of 0.22%, with the central bank expanding its gold reserves for four consecutive months. As of the end of February 2025, China’s foreign exchange reserves amounted to US$3.2272 trillion, up by US$18.2 billion from the end of January, an increase of 0.57%. Regarding tariffs, an announcement by the State Council’s Tariff Commission stated that from March 10, tariffs on US chicken, wheat, corn, and cotton will be raised by 15%, while tariffs on soybeans, pork, fruits, and others will be raised by 10%; from March 20, 2025, Canadian-origin rapeseed oil, oil cake, and peas will be subject to a 100% tariff, and Canadian seafood and pork will face a 25% tariff.
Leading stocks raised this week. The average stock in the MarketSmith Hong Kong 33 rose by 2.3% for this week. Our Hong Kong Model Portfolio fell by 0.3% for this week (see details in the Model Portfolio section). Since June 20, 2013, the Hong Kong 33 is up 722.9% vs. a 19.4% up for the Hang Seng.
The best performer in our Hong Kong 33 was TSUGAMI CHINA(01651), it’s a a leading manufacturer of high-precision CNC machine tools in China. The stock gained 39.8% this week. EPS rating stands at 98, RS rating of 98, and A/D rating of A+.
Our Hong Kong Market Status are in a Confirmed Uptrend.
From a technical perspective, the Hang Seng index made up for the gap formed by last Thursday’s short jump at the beginning of this week, and then stabilized near the 21-DMA; On Friday, the market rebounded in volume and prices, recovering the 5-DMA in one fell swoop, indicating an increase in short-term bull momentum. Although the turnover of the whole week has shrunk slightly compared with last week, if the index can stabilize the 5-DMA and continue to replenish, the follow-up is expected to further test the key pressure level upward. Regarding the Southbound inflow via the HK-China Stock Connect, the net inflow trend continued this week, totaling HK $61.609 billion, maintaining the trend for 29 consecutive weeks. On the whole, Hong Kong stocks stepped out of the resilient market this week in the game between external disturbances and internal policy underpinning, and released short-term stabilization signals after technical repair. However, potential risks still need to be vigilant, such as the continued weakening of U.S. stocks and the escalation of geopolitical frictions or the suppression of global risk appetite. In addition, there are still uncertainties in external variables such as the escalation of trade frictions between China and the United States and the swing of Fed policy expectations. Therefore, investors are advised to remain calm and rational, avoid blindly chasing gains, and prioritize stocks with better-than-expected earnings and solid technical patterns. Adopting a prudent strategy will help navigate potential market fluctuations more flexibly.
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published on March 14, 2025