Coach Mo • Fed's hawkish tone + spreading war! Hang Seng Index falls below the 20-day moving average. 21-06 Review
Hello everyone, time flies so fast, it's time for me, Mo Shuai, to share my weekly summary and review. Writing long posts isn't easy, so I sincerely hope everyone can give me more attention and support 🙏🙏
Review of this week's market trends
Last week, I mentioned that the market trend of the $Hang Seng Index(00HSI.HK) would be impacted by the Israel-Iran conflict, interrupting the current upward wave and leading to a consolidation phase. As expected, the market corrected this week, especially since there were no particularly positive news to offset the negative factors from the escalating Middle East situation. Despite this, the market did manage a low-to-high trend at one point, especially at the start of the week when it opened 101 points lower at 23,891 points but quickly regained lost ground, closing above the 10-day moving average at 23,956 points and even reclaiming the 24,000 level. At the time, funds believed the market had digested the negative impact of the Middle East conflict, coupled with optimism from the Lujiazui Financial Forum's potential pro-economy policies. Unfortunately, the market only rose to this week's high of 24,131 points before retreating, showing a three-day consecutive decline. Particularly on Thursday, the market fell sharply by over 500 points due to the Fed's decision to maintain interest rates, which, while expected, came with slightly hawkish signals amid concerns over tariff-induced inflation. This pushed the market below the long-held 20-day moving average at 23,712 points, hitting a weekly low of 23,185 points before rebounding. However, the market failed to reclaim the critical 20-day moving average at 23,698 points, closing at 23,530 points. The only consolation was that the market held above 23,500 points, keeping the upward trend intact for now.
This week's initial rise was driven by optimism around the Lujiazui Financial Forum's policies, but subsequent deterioration in the Israel-Iran conflict and the Fed's hawkish tone led to a weekly decline. However, the correction was milder than expected, with traditional blue-chip financial stocks like $CCB(00939.HK), $ICBC(01398.HK), and $CM BANK(03968.HK) rising against the trend, hitting new highs. Meanwhile, the strongest insurer, $CHINA LIFE(02628.HK), remained popular, holding above HK$18. In contrast, blue-chip tech stocks underperformed, with $MEITUAN(03690.HK) being the worst performer among the ATMX group, while $TENCENT(00700.HK) and $BABA-W(09988.HK) remained range-bound. $XIAOMI-W(01810.HK) was the best performer, rising against the trend.
In summary, the market fell 362 points this week, closing at 23,530 points. Trading volume totaled HKD 1.06 trillion, slightly lower than last week but maintaining a daily average above HKD 200 billion, though momentum is weakening amid increasing uncertainties.
Technically, the market showed a high-to-low pattern, with this week's high of 24,131 points below last week's high of 24,439 points, and this week's low of 23,185 points below last week's low of 23,774 points. The weekly chart shows a bearish candle, but the overall trend remains in a consolidation phase. However, the market outlook is still dominated by Middle East tensions and tariff risks, with potential further consolidation. Key support lies at the previous low of 22,668 points (the 50-day moving average), while resistance is forming around 24,000 points.
Next week's market outlook
On Friday, the three major U.S. indices—$Dow Jones Industrial Average(.DJI.US), $NASDAQ Composite Index(.IXIC.US), and $S&P 500(.SPX.US)—showed a high-to-low trend but remained in consolidation. Early optimism about a negotiated resolution to the Israel-Iran conflict caused gold and oil prices to drop sharply, while a Fed official hinted at potential rate cuts soon. This led to mixed performances among tech stocks like $Apple(AAPL.US), $NVIDIA(NVDA.US), and $Tesla(TSLA.US), with only Apple closing higher. Later declines were driven by rumors of revoked semiconductor export waivers, hitting chip stocks like $NVIDIA(NVDA.US) and $Taiwan Semiconductor(TSM.US). As I've said repeatedly, a strong U.S. market doesn't guarantee a Hong Kong market rally, but a U.S. correction would drag Hong Kong down. With no major positive catalysts locally, I expect the Hong Kong market to continue consolidating next week. Stay tuned 😉😉
This week's highlights
1. The market focused on stablecoin-related stocks, with only U.S.-listed $Circle(CRCL.US) surging nearly 80% to $240, while Hong Kong stocks like $ZA ONLINE(06060.HK) rose just 5%.
2. The week's IPO spotlight was on consumer giant $HAITIAN FLAV(03288.HK), which disappointed with a debut drop despite 900x oversubscription and expectations of a 10%-15% premium over its A-share price.
3. Insurers outperformed, led by $NCI(01336.HK) (up 4%), while $CHINA LIFE(02628.HK) and $CHINA TAIPING(00966.HK) also rose.
This week's trades
$TRANSTHERA-B(02617.HK)~ I was lucky to get this IPO, selling at HK$22.5 for a 70% gain after an initial scare from volatility.
$SANHUA(02050.HK)~ Another IPO disappointment, mirroring $HAITIAN FLAV(03288.HK)'s flop. Hoping for a rebound next week.
$Sunac China(01918.HK)~ Bought at HK$1.42, targeting HK$1.7 as property stocks may follow financials' strength.
Portfolio performance
$LI NING(02331.HK)~ Strong week, breaking HK$16 but settling at HK$15.72. Momentum is building, targeting HK$18 next.
$BABA-W(09988.HK)~ Weak again, testing HK$110 support. Needs to reclaim HK$115 to reverse the downtrend.
Outlook and strategy
Earlier, I suggested gold strategies amid its pullback from highs. Post Israel-Iran conflict, gold neared $3,450/oz before retreating to $3,340. $VALUE PARTNERS(00806.HK)'s 2025 outlook highlights gold's hedge against Trump-era tariffs, inflation, and geopolitics. Their physically backed ETF, $VALUEGOLD ETF(03081.HK), supports HKD, CNY, and USD, making it a unique inflation hedge. Caution advised due to gold's volatility.
Summary
This week's rally to 24,000 on Lujiazui hopes was undone by Middle East tensions and Fed hawkishness, pushing the market to 23,185. Safe havens like $Circle(CRCL.US) soared, while the broader market consolidates. June's end may bring window-dressing support.
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