$Hang Seng Index (800000.HK)$ $Hang Seng TECH Index (800700.HK)$ Hong Kong has a linked exchange rate system between the Hong Kong dollar and the US dollar. When the exchange rate of the Hong Kong dollar to the US dollar rises to the strong exchange guarantee level of 7.75, it often indicates that Hong Kong stocks may usher in a favorable market. Here's the specific analysis:
Historical performance: The level of strength is closely linked to the Hong Kong stock market
• March 2020: The HKD exchange rate rose to a strong 7.75 exchange guarantee level and remained in this position for 10 months. During this period, Hong Kong stocks showed a strong upward trend.
• 2013-2016: The Hong Kong dollar exchange rate was at the level of strong exchange guarantee for most of the time. Among them, Hong Kong stocks broke out of a slow bull market in the first 4 years.
• November 2008 - November 2009: Hong Kong stocks experienced a strong rebound while the HKD exchange rate was at the level of strong exchange guarantees.
The logic behind it: the path of influence of the exchange rate mechanism on the stock market
According to Hong Kong's exchange rate arrangement, when the Hong Kong dollar hits the exchange guarantee level of the strong party, the Hong Kong government will take two measures to prevent the Hong Kong dollar from continuing to appreciate:
1. Foreign exchange market intervention: selling Hong Kong dollars and buying US dollars to increase the supply of Hong Kong dollars in the market.
2. Interest rate adjustment: Reduce the Hong Kong dollar interest rate to create a broad macroeconomic environment for the currency.
This series of operations will increase market liquidity and reduce financing costs, thereby providing favorable conditions for the stock market to rise.
Future outlook: focus on exchange rate ranges and grasp investment signals
From history...