After reaching last October's high, the Hong Kong stock market has not adjusted and continues to rise, breaking past three years of experience. Can this &#34;in-flight refueling&#34; be sustained? What catalysts could drive further increases in the future? <img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b0f6feed-ac4c-4e65-87ab-2f8f675e5555.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/b0f6feed-ac4c-4e65-87ab-2f8f675e5555.jpeg"/> 1. Rising leads to greater rises. A large number of investors, based on past experience, either take profits or open large short positions when the Hang Seng Index reaches previous highs. If the market continues to rise, hedge fund shorts may be forced to cover, and profit-taking investors may also be forced to buy back, driving further increases. <img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/e3308466-9d16-4a0a-b9aa-104b9a6f6804.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/e3308466-9d16-4a0a-b9aa-104b9a6f6804.jpeg"/><ol><li>Decline in the U.S. market. The vast majority of global investors continue to be optimistic about U.S. stocks (the performance of the U.S. stock bull market over the past decade has eliminated all shorts); on the other hand, they are concerned about short-term fluctuations and declines in U.S. stocks. Some global investors have previously shifted their U.S. stock investment positions to other markets, including Hong Kong stocks. However, they are still observing the earnings report period starting in April. Historically, strong performance from U.S. companies has led to good performance in the U.S. stock market during each earnings season. If the U.S. earnings season in April performs poorly, or after the earnings disclosure period, many investors may &#34;sell in May and go away.&#34; These funds leaving the U.S. stock market may increase their positions in Hong Kong stocks, leading to a rise. <img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/9374d4cc-fd9d-4562-937b-89efc727c058.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/9374d4cc-fd9d-4562-937b-89efc727c058.jpeg"/></li><li>Decline in benchmark interest rates. Affected by the Federal Reserve's pause in interest rate cuts, interbank lending rates in Hong Kong remain high. However, we have observed that the broad funding prices in the Hong Kong market, such as municipal bond rates (junk bond rates), have been continuously declining this year, consistent with the downward trend of U.S. Treasury yields. In the future, if the Federal Reserve resumes interest rate cuts, interbank rates in Hong Kong will decline, leading to a decrease in the risk-free rate of Hong Kong stocks and an increase in the stock market.</li></ol><img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/12186e14-2fb5-4a21-adcc-6879e57e97e7.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/12186e14-2fb5-4a21-adcc-6879e57e97e7.jpeg"/><ol><li>Inflow of overseas funds. So far, nearly half of the net inflow of funds driving the rise of the Hang Seng Technology Index has come from southbound funds. Overseas funds have not yet fully exerted their strength. In the future, if more data shows that China's macro economy bottoms out in the real estate cycle in the second and third quarters of 2025 and escapes deflation, once the CPI approaches 2% and the PPI turns positive, clear signals indicating that corporate profits in 2025 exceed those of 2024 will emerge. Then, a large amount of overseas funds will flow significantly into the Chinese market, not just limited to the technology sector, leading to a comprehensive rise in Hong Kong stocks. <img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/23e0d319-4d6b-4b8b-adde-a4f1bba6fbc8.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/23e0d319-4d6b-4b8b-adde-a4f1bba6fbc8.jpeg"/></li><li>Historical experience shows that during the process of overseas capital flowing into Chinese assets, Hong Kong stocks perform better than Stock Connect and A-shares. <img src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/95b0c303-afc7-4253-a2c3-f3a5330f9864.jpeg?x-oss-process=image/auto-orient,1/interlace,1/resize,w_1440,h_1440/quality,q_95/format,jpg" alt="" original-src="https://imageproxy.pbkrs.com/https://wpimg-wscn.awtmt.com/95b0c303-afc7-4253-a2c3-f3a5330f9864.jpeg"/></li></ol>Risk Warning:1) Economic recovery is weaker than expected: A weaker-than-expected economic recovery may exacerbate market uncertainty;2) The pace of Federal Reserve interest rate cuts is slower than expected: This may have a negative impact on the liquidity of A-shares;3) Geopolitical &#34;black swan&#34; events: Affecting foreign capital flows.Source: Chen Li / Chen Meng / Ge Xiaoyuan, Source: Chen Li lichen, Original title: &#34;The Momentum of Hong Kong Stocks 'In-Flight Refueling'.&#34;Risk warning and disclaimerThe market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment objectives, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investing based on this is at your own risk

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Hong Kong stocks have continued to rise after breaking through last October's high, with potential driving factors in the future including: 1. Rising prices leading to further increases, forcing short sellers to cover their positions; 2. A decline in U.S. stocks causing funds to flow into Hong Kong stocks; 3. A decrease in benchmark interest rates potentially stimulating the rise of Hong Kong stocks; 4. Inflows of overseas capital, especially attention to the Chinese market; 5. Historical experience shows that Hong Kong stocks tend to perform well when overseas funds flow into Chinese assets

- The Hong Kong stock market continues to rise after reaching last October's peak, defying past trends.  
- Key catalysts for this upward momentum include potential forced buying from short-sellers, shifts in global investment due to U.S. market fluctuations, and a decrease in benchmark interest rates.  
- Additionally, increased overseas capital inflow could further boost the market, especially if China's economic indicators improve in 2025.

The momentum of "in-flight refueling" in Hong Kong stocks