The real estate sector is booming, how high will the Hang Seng Index soar? (May 19, 2024)

Preface: Last Friday, China suddenly announced several arrangements regarding housing loans. News reports indicated that the number of people looking for houses in the mainland surged by 40%. How much stimulus will this bring to mainland property stocks? And how much impact will it have on the Hang Seng Index?

U.S. Market Update

$Dow Jones Industrial Average(.DJI.US) finally closed above 40,000 points last Friday, at 40,004 points, up 134 points, marking the highest closing price in history. However, the $NASDAQ Composite Index(.IXIC.US) was relatively weak, closing down 12 points at 16,686 points.

Recently, the divergence between the Dow and the Nasdaq has become more frequent. This is not a good sign for U.S. stocks. Two years ago, before the major adjustment in U.S. stocks, the three major indices first experienced a period of individual development. Fortunately, there are no particularly significant data releases in the U.S. this week, with only the FOMC meeting minutes on Wednesday night and the new jobless claims on Thursday. Additionally, this week is the U.S. futures settlement day, so it is expected that U.S. stocks will not experience major fluctuations.

Regarding U.S. stocks, you don’t need to pay too much attention this week; just keep an eye on them slightly.

Hong Kong Market Update

$Hang Seng Index(00HSI.HK) closed above 19,500 last Friday, up 177 points at 19,554 points. The night session closed 150 points higher than the day session at 19,704 points. It is expected that the Hong Kong market will open with a gap up tomorrow.

Strategy

Last Friday, the Hong Kong market continued with heavy trading volume, reaching nearly HKD 180 billion. With such trading volume, it seems this upward trend in Hong Kong stocks can continue for a while.

Continuing with the head-and-shoulders bottom measurement method, the previously projected target of 195 has been achieved. The night session closed at 197, and it is expected to open with a gap up tomorrow, with a chance to challenge 20,000 points this week. However, as mentioned in previous articles, once the Hang Seng Index reaches 195, it’s time to start reducing positions in batches. The 206 and 209 points marked in the chart are just reference indicators; they may or may not be reached. It’s correct not to predict the top in a rising market, but nothing lasts forever. Reducing some positions to free up capital and stay flexible is wise, allowing for more agile speculative activities if unexpected situations arise later.

Last Friday, the mainland introduced optimized mortgage policies. News flooded in, saying the government is rescuing the property market and that mainland property stocks are hot again. However, a closer look reveals that these policies are not encouraging speculation. The national policy remains "housing is for living, not for speculation." Relaxing loans and encouraging state-owned enterprises to acquire commercial properties for residential use are measures to ensure housing supply and prevent unfinished projects. However, the market will inevitably get excited for a while. So, if you want to short-term trade mainland property stocks, that’s fine, but for long-term investment, I remain cautious. Country Garden and China Evergrande are still suspended. For short-term trading, $AGILE GROUP(03383.HK), which rose nearly 25% last Friday, seems better.

On the other hand, these optimized loan policies are actually beneficial to mainland bank stocks. Banks can now decide on loan interest rates, meaning they can offer more attractive loan plans to attract high-quality customers. This is good for their business, and they can lend out excess idle funds. Mainland bank stocks can be viewed more optimistically for the future. Among them, the leading stocks are: $CCB(00939.HK), $ICBC(01398.HK), $CM BANK(03968.HK), and $BANK OF CHINA(03988.HK).

This time, the upward momentum of the Hang Seng Index seems to come from mainland bank and property stocks. Will tech stocks take a break?

(The above views represent personal opinions only. Any investment strategies provided in this article may not be suitable for everyone and should not be considered as an invitation or intention to buy or sell financial products. Securities prices can rise or fall and may even become worthless. Trading securities does not necessarily guarantee profits and may result in losses. Investors and clients should exercise caution and consider this as one of many factors when making investment decisions.)