<p>On March 2, it was mostly cloudy with a few light rain showers in the morning, and some areas experienced fog. As March begins, the capital market is inevitably affected by the conflict in the Middle East, leading to short-term fluctuations in the Hong Kong and China stock markets. Last Monday, the Hang Seng Index surged by 668 points with a gap up, recovering the 5-day, 10-day, and 20-day moving averages, but unfortunately, the upward momentum could not be sustained, and the index fell below all three moving averages the next day. After fluctuating, the index rebounded to close at 26,630 last Friday. Overall, the Hang Seng Index rose by 217 points or 0.82% for the week, but it dropped by 756 points or 2.76% in February, showing a clear weakening trend, especially with the tech index performing even worse, having already fallen below the 250-day moving average (5,586), which is known as the dividing line between bull and bear markets, and remaining below all moving averages.</p>
<h2>25,800 to 26,200 as the heavy zone for bull certificates</h2>
<p>During the night session and ADR period on Friday, the Hang Seng Index followed the U.S. stocks downward, reverting back below the 26,500 level. Over the weekend, the U.S. and Israel launched a joint attack on Iran, resulting in the death of Iran's Supreme Leader Ali Khamenei, with the Tehran government announcing a 40-day national mourning. Khamenei's death may worsen the geopolitical situation in the Middle East, but it could also accelerate the return of the U.S. and Iran to the negotiating table, which remains uncertain. However, stock markets around the world are expected to decline immediately, with futures dropping to the 26,300 level and gold prices surging above $5,300. It is anticipated that Hong Kong stocks will open with a gap down this morning, retreating to the February low of 26,300, with the 26,200-26,300 range being a heavy zone for bull certificates. There is also a significant concentration of bull certificates in the 25,800-26,200 range, and it cannot be ruled out that Hong Kong stocks may follow the external markets downwards, potentially breaching the 25,800-26,200 heavy zone for bull certificates and retesting the January low of around 25,700.</p>
<p>Looking ahead to this week, the mainland will hold the National People's Congress, and the market will focus on the economic growth targets, deficit rates, fiscal stimulus measures, and policies affecting various industries that could have potential impacts on the asset market. This week, several heavyweight stocks in Hong Kong and the U.S. will announce their earnings, and the performance of these related stocks will continue to influence the overall market. However, multiple clouds still loom over the global capital market, with heightened risk aversion. It is expected that Hong Kong stocks will seek support downwards, and there is a possibility that the Hang Seng Index will fall below the January low. If Hong Kong stocks cannot stabilize at 26,300, the head and shoulders pattern on the daily chart may lead the market to test the 25,900-26,000 level for support. If it breaks below the 25,500 level, it may further test the 25,000 level for support. As for resistance to rebound, it is at 26,600-26,800. If it cannot stabilize above 26,800, the adjustment will continue.</p>
<h2>25,000 or 24,500 may become an entry opportunity</h2>
<p>However, currently, Hong Kong stocks are relatively more attractive in terms of valuation compared to other markets, especially as the AH share premium has widened again. For this reason, since last Wednesday, there has been a noticeable net inflow of northbound capital. Additionally, with the National People's Congress being held this week, the mainland's &#34;14th Five-Year Plan&#34; emphasizes technological self-reliance. Sectors such as semiconductors, AI computing power, cutting-edge technology, and aerospace military industry may receive more national policy subsidies and order support this year. In fact, behind every crisis lies an opportunity for wealth redistribution; where there is risk, there is opportunity. If Hong Kong stocks undergo a significant adjustment following external declines, it may present an entry opportunity
If the Hang Seng Index falls to the 25000/24500 level this month, it will become a good entry point.</p>
<p><strong>Goo Tian Hou</strong></p>

03037

07500

00HSI

03115

02800

07200

07300

<p>Hong Kong stocks are affected by the Middle East conflict, with increased volatility in the short term. After rebounding last week, the Hang Seng Index has once again fallen below multiple moving averages, showing a weakened overall performance. It is expected that Hong Kong stocks will open lower this morning, possibly retreating to the 26,300 level. Market risk aversion is high, and attention should be paid to the impact of the National People's Congress on economic policy. Multiple uncertainties may lead Hong Kong stocks to continue to search for support</p>

Stheadline

CSOP HSI ETF

FI2 CSOP HSI

Hang Seng Index

ISHARESHSI

TRACKER FUND

FL2 CSOP HSI

FI CSOP HSI

Hong Kong stocks may provide buying opportunities as they adjust significantly with external factors｜Gu Tianhou