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<About Stock Markets>The Low Price of Hong Kong Stocks Has Not Been Calculated

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Regarding the US debt ceiling negotiations, the two parties are still divided. The US Treasury Department has stated that it will not be able to pay all the bills as soon as June 1. Fitch has put the US on the watch list and may downgrade the US "AAA" sovereign rating. However, it is generally believed that "nothing will happen in the end" and that the two parties will finally reach an agreement. Some argue that the endless debt negotiations have become a political tool, that a government will not perish, and the existence of the debt ceiling is not necessary. I disagree with this. Because there is no debt ceiling in the United States, the parties involved can print bank note without limit, which will eventually completely consume market confidence. Relatively transparent policies are still necessary. The Dow hit a high of 34,259.2 on May 1 and then turned down. At the time of writing, it fell to 32.799.92, a drop of nearly 4%. The S&P 500 fell 1.3%. However, the Nasdaq 100 Index has risen by 2.7% since the end of last month due to the strong trend of ChatGPT concept and chip stocks. It has risen by 2.7% since the end of last month, which shows that the market performance is very calm, just pay attention to it. 

In Asia, the Japanese stock market has been strong since Warren Buffett announced in August 2020 that he would start buying the five major general traders in Japan. Recently, the Nikkei index has reached a new high in 33 years, and it has risen by nearly 20% this year alone. However, this is in exchange for the ultra-low interest rate policy and the depreciation of the yen at a painful price. In fact, the Nikkei average index has only increased by 12.3% since 2021 (dividends have been deducted). However, the US dollar depreciated by one-third against the Japanese yen during the same period. If investors did not hedge against exchange rate risks, investing in Japanese stocks would make a real profit. For ordinary investors, if they want to invest in overseas stocks other than US stocks, it is best to choose ETF! The Hang Seng Index continued to fall in May. At the beginning of the month, it once rose above 20,000 points. However, after failing to break through the important barrier of 21,000 points, it turned around and fell again. At the time of writing, it even fell below the March low of 18,829 points to 18,721.52 points. 

The Hang Seng Index continued to fall in May. At the beginning of the month, it once rose above 20,000 points. However, after failing to break through the important barrier of 21,000 points, it turned around and fell again. At the time of writing, it even fell below the March low of 18,829 points to 18,721.52 points. The Hang Seng Technology Index has underperformed since April, and has fallen by more than 12.8% since the beginning of the year, which proves that the current Hong Kong stock market is weak. As for the State Index, its trend has been very close to that of the Hang Seng Index in recent years. Most of the constituent stocks of the Hang Seng Index are Chinese concept stocks, making the degree of overlap between the two increasingly high. I doubt whether the State Index is still necessary to continue to exist in the long run. If so, you can test that the correlation coefficient between the two. The economic trend in the Mainland is also worrying. The renminbi continues to fall, and asset prices are not performing well. Developers are trying to sell properties. In addition to zero mortgages, they even found out that they can buy properties with a "negative down payment" and can cash out renovation costs.  

Even so, the performance of Chinese telecommunications stocks, local and mainland banking stocks that I recommended last month is fair relative to other sector stocks. At the time of writing, leading companies such as China Mobile (0941), China Unicom (0762), HSBC (0005) and ICBC (1398) are all outperformed the market, among which ICBC still recorded positive returns! The author of the April Monthly mentioned that "the technical chart has gradually formed a "head and shoulders" pattern since December. If it is confirmed that the neckline of 18,799 - 18,829 is lost, the decline can fall to around 15,000 points according to the measurement." Now that there are signs of falling below, and there is no news of a sudden turnaround in the short term, the market outlook still has a higher chance of falling. Therefore, the relative valuation of sectors with more "conservative" business will gradually increase, which is different from the valuation of technology stocks. The value gap will be further narrowed. In June, the market will still prefer risk-adverse stocks. What's more, you can wait and see first, and wait for the trend to change before entering the market. 

The Bank of East Asia (0023) recommended last month was slightly stronger than the market. Under the relatively passive market conditions, it rose first and then fell to 10.16 dollars at the time of writing, which is basically the same as the price recommended last month. The stock price has sufficient support around 10 dollars, and the dividend spread of local banks is expected to further widen. The trend is stronger than that of mainland banking stocks. In addition, the business is quite stable. Therefore, it is recommended that investors can continue to hold for mid-line deployment and continue to maintain Just stop loss if it falls below 9.5 dollars. The stock price has enough support around 10 dollars, and the dividend spread of local banks is expected to further widen. The trend is stronger than that of domestic banking stocks. In addition, the business is quite stable. Therefore, it is recommended that investors can continue to hold for midline deployment and continue to stop loss if it falls below 9.5 dollars. 

As for this month, the author recommends GCL Technology (3800). The quality of the polysilicon produced by the company has improved rapidly. The proportion of products meeting the N-type demand has exceeded 75%, and the cost control is gradually showing results. After earning 2.15 times more to 16.03 billion dollars last year, the new polysilicon production capacity was gradually released in the first quarter of this year. The company's revenue increased by 60.1% to RMB 11.19 billion, while net profit increased by 35% to RMB 4.09 billion. The national policy of carbon neutrality remains unchanged. At the same time, the European Union will implement the carbon tariff plan in 2026, which will further transform mainland enterprises to environmentally friendly production. Therefore, the price of polysilicon products is expected to remain at a relatively high level this year, and net profits are expected to increase further. Although the stock price fell below 1.8 yuan recently, it rebounded rapidly. The stock price is estimated to be near the 20-day moving average and the MACD has also risen above the signal line. It is expected to rise to 2.1 dollars in the short term.


Kay Ho (CE No.: ANV293)

Acer King Capital Hong Kong Limited

 

Statement: The author is a licensee of the 1st, 4th, and 9th types of licenses of Securities and Futures Commission, SFC. Acer King securities Limited and Acer King Capital Hong Kong Limited were invited to contribute articles in Hantec Group's monthly newsletter as an independent third party. The writing does not represent the position of Hantec Group. As the author does not personally hold the above-mentioned shares, investors should exercise caution when buying or selling relevant securities and investment instruments.



 


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