Credit By: Bloomberg.com
In a welcome development, Hong Kong stocks rose significantly in three weeks, propelled by hope for a pivotal economic and political summit in Beijing. After President Xi’s latest Politburo meeting, investors placed their bets on the Central Economic Work Conference, yielding favorable results. Additionally, technical signs hint at the possibility that the newest market sell-off is nearing its peak.
The Hang Seng Index ended a three-day slump that had driven the benchmark to a 14-month low with a 1.1% gain at 16,374.50. The Shanghai Composite Index increased by 0.4%, while the Tech Index recorded a growth of 1.7%.
Key companies contributing to the positive momentum include:
Li Ning: The sportswear manufacturer recovered after a 14% decline the day before, rising 4.4% to HK$19.10.
Tech Giants: Alibaba Group gained 1.9%, Tencent gained 1.4%, Baidu gained 2.1%, and JD.com added 2.1%.
Following the billionaire and owner Cheng family’s December 11 purchase of 700,000 shares in the Hong Kong developer, New World Development also saw a 1.6% increase.
Technical Indicators and Market Analysis
The latest increase contributed to the Hang Seng Index’s monthly drop being limited to 3.9%. The index’s 14-day relative strength technical indicator dropped below 31, which usually indicates an impending market reversal.
Following a protracted fall, analysts, such as Dai Qing from Guotai Junan Securities, pointed out that Hong Kong’s equities are at an all-time low. A short-term technical bounce may result from this position, and the coming Central Economic Work Conference may serve as a trigger.
Anticipation of Central Economic Work Conference
This week, the Central Economic Work Conference is taking place in a setting made possible by President Xi Jinping’s recent chairing of the Politburo meeting on December 8. It is anticipated that authorities will discuss inefficient and delayed policy implementation after the dovish Politburo meeting in July, as recommended by Goldman Sachs.
Global Economic Factors
Market sentiment is also influenced by global economic variables, which go beyond local dynamics. The general market environment is influenced by the expectation of a 3.1% increase in US consumer prices for November and the Federal Reserve’s anticipated decision to keep its key rate steady.
Regional Market Movement
Most Asian markets saw increases overall, with Australia’s S&P/ASX 200 adding 0.5%, Korea’s Kospi index rising 0.4%, and Japan’s Nikkei 225 rising 0.2%. The equities markets’ overall regional sentiment is reflected in this upward trend.
In summary, positive technical signs and anticipation around the Beijing meeting are driving the current rally in Hong Kong stocks. Investors are keenly watching the Central Economic Work Conference, and the general mood of the market suggests a possible recovery from recent lows.
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