Looking back on Hong Kong stocks, it's been five months since 2023, when the three major Hong Kong indices, Hang Seng Index, SME Index and Technology Index, fell 7.8%, 8.1% and 12.2% respectively, finishing at the bottom of nearly 100 major stock market indexes worldwide, and were again “bearish” after 2021. When measured by the January highs and the end of May lows, all three major indexes fell more than 2%, once again falling into a technical bear market. Weakness in Hong Kong stocks has far-reaching and near-term causes.
Due mainly to the divergence in Sino-US relations, there have been signs of a gradual outflow of funds from Hong Kong stocks in recent years, which can be seen in a gradual decline in the amount traded in the major markets. More recently, the Mainland's economic growth was not as expected, the post-pandemic recovery was too low compared to market expectations. The depreciation of the renminbi pressured the renminbi, and the flow of North Sea also decreased, so that Hong Kong stocks continued to improve.
But hey, I don't think you need to be too pessimistic. Here's what I think about the Hong Kong stock market in June. First, Hang pointed to a drop below 20000 points only in 2008, 2011 and 2022, after rising above 20000 points since the market hit 20000 points in 2007. Under the effect of low fundamentals and gradual easing of high inflation. If the Fed slows further until it stops raising interest rates, the dollar hopes to strengthen for a while, and the Mainland gradually moves towards a gradual easing of its comprehensive anti-epidemic policy. Continued rapid economic growth in the Mainland is expected to ease the risks of a recession in the periphery, and Hong Kong stocks, which have suffered three years of declines, will rebound in the second half of June 2023. Please don't be too pessimistic.
As for the US stock market...