Guo Jiayao: Hong Kong stocks may experience a short-term correction, possibly testing support at 18,800 points.

The Managing Director of Huiying International Asset Management, Guo Jiayao, stated that the US stock market rebounded on Tuesday (18th), with strong performance in the banking sector driving the market up, and all three major indices recorded gains at the close. The US dollar fluctuated, and the yield on the US ten-year Treasury bond fell to 3.78 basis points, while the prices of gold and oil showed positive trends. Hong Kong stocks are expected to open lower, with pre-market securities generally falling. The mainland stock market was slightly weak yesterday, with the Shanghai Composite Index closing down 0.4%, and the trading volume in Shanghai and Shenzhen further shrinking. Hong Kong stocks experienced a downward trend, with the index briefly falling below the 19,000-point level, but the decline narrowed slightly at the close, and trading activity was higher than before. Market concerns about the mainland's economic outlook, coupled with previous significant gains, suggest that there is room for a short-term correction in the index, with support at around 18,800 points and resistance at the 19,500-point level. The People's Bank of China (PBOC) issued a notice in conjunction with the China Banking and Insurance Regulatory Commission (CBIRC) regarding the stable and healthy development of the real estate market, extending the application deadline to December 31, 2024. The PBOC stated that for existing financing such as development loans and trust loans for real estate enterprises, financial institutions are encouraged to support them through negotiations based on commercial principles, actively providing support through loan extensions and adjustments to repayment arrangements, while ensuring the safety of creditors' rights, and promoting the completion and delivery of projects. For loans that are due before December 31 of next year, an extension of up to one year beyond the original deadline is allowed without adjusting the loan classification, and the loan classification reported to the credit information system should remain consistent. For commercial banks that provide special loan support to projects in accordance with the notice, the risk classification should not be downgraded within the loan term, and the borrower should be managed as a qualified borrower after the separation of old and new debts. If the newly issued supporting financing becomes non-performing, relevant institutions and personnel who have fulfilled their duties may be exempted from responsibility. Apart from the two policies mentioned above, other policies that do not involve application deadlines remain effective in the long term. Financial institutions should effectively implement the requirements of the documents, adopt differentiated policies to support both rigid and improved housing demand based on local conditions, maintain reasonable and moderate real estate financing, increase financial support for the completion and delivery of buildings, promote the market-oriented clearing of industry risks, and facilitate the stable and healthy development of the real estate market. The PBOC's implementation of policies to support the real estate industry will help alleviate market concerns, but other policies need to be coordinated in order to reverse weak sales and address the funding issues faced by real estate companies. (The author is a licensed person of the China Securities Regulatory Commission, and neither I nor related parties hold the above-mentioned shares)