{Economic Information Daily, October 2} Hong Kong stocks plunged on their first trading day in October. Although U.S. Federal Reserve officials have turned dovish one after another, reducing the likelihood of a 0.25% rate hike at the end of the month to only 24%, the yield on the U.S. 10-year Treasury bond surged past 5.3% recently. Coupled with the suspension of northbound funds during China's National Day Golden Week holiday, market support for Hong Kong stocks weakened significantly. The Hang Seng Index opened with a gap down of 500 points, immediately triggering liquidation in heavily concentrated long futures positions exceeding 2,100 contracts. Major financial stocks led the decline, pushing the index's intraday drop to over 700 points, hitting a low of 23,865. The index failed to recover the psychological 24,000 level in the afternoon and closed at 23,972, down 640 points or 2.6%. Total turnover on the main board exceeded HK$145.8 billion. The Hang Seng China Enterprises Index closed at 8,030, down 189 points or 2.3%. The Hang Seng Tech Index closed at 4,157, down 95 points or 2.3%.
The weakening support for Hong Kong stocks due to the halt in northbound flows was expected, but the index's decline of over 700 points exceeded general market expectations. With reduced trading volume due to the northbound flow suspension, market direction is typically dominated by index futures. Today's breach of heavily concentrated long positions and consecutive breaks below 24,000 suggest a weakening outlook for Hong Kong stocks. With the Hang Seng Index now below 24,200—the support level seen in March this year—if it can hold this level, there remains hope for forming a pattern resembling a head-and-shoulders bottom. However, today's sharp drop has reinforced the downward channel trend since late August. Short-term support for the index is expected at 23,800; if support remains weak next Monday, the next key level would be 23,000.
*HSBC faces strong selling pressure from major investors, requiring time to digest; refrain from aggressive bottom-fishing below HK$150*
The UK Labour government, struggling with fiscal issues, is rumored to be planning to increase the 'additional bank tax,' which currently generates up to £2.6 billion (approximately HK$27 billion) annually for the UK government. HSBC (00005), the largest heavyweight in Hong Kong stocks, bore most of the market's selling pressure today, plunging 5.38% or HK$8.5, closing at HK$149.5 and losing the HK$150 level. Standard Chartered (02888) also fell 5.97% to HK$229.8.
HSBC's turnover exceeded HK$3.7 billion today, an increase of over HK$2.4 billion from the previous day. The active buy-sell ratio for HSBC was 49:51. For large traders with transaction sizes between HK$2 million and HK$5 million, the active buy-sell ratio was 46:54. The selling pressure intensified among larger trades, with ultra-large traders (transactions over HK$10 million) showing a buy-sell ratio of 19:81, indicating strong selling pressure from major investors. In contrast, retail investors showed a buy-sell ratio of 70:30, suggesting retail investors absorbed more of the current selling. Additionally, HSBC's current price has broken below its 100-day moving average, a rising trend line in place for two years, and also breached the key support level of HK$150. Aggressive bottom-fishing at current levels is unadvisable in the short term. Investors should wait and observe whether clear support emerges near or below HK$150 next Monday before considering adding positions.
*Financial stocks broadly slump; New World's airport project divestment fails to counter market-wide selling pressure*
With high U.S. bond yields, financial stocks came under broad pressure, especially international financial names. HSBC fell 5.4% to HK$149.5; Standard Chartered (02888) dropped 6% to HK$229.8; AIA (01299) declined 6% to HK$69.2; Bank of China Hong Kong (02388) fell 3% to HK$50.7; CCB (00939) dropped 2.7% to HK$9.555; ICBC (01398) fell 3.3% to HK$7.455; Ping An (02318) declined 1.4% to HK$52.
New World (00017) announced it will pay a total of HK$2.3 billion in early termination fees to the Airport Authority and will return the entire 11 SKIES project to the Airport Authority on April 1 next year, resulting in a net loss of approximately HK$18.3 billion, already reflected in its financial results for the year ended June. This loss contributed to a total loss of around HK$28.15 billion for the year ended June 30, significantly wider than last year's loss of approximately HK$16.3 billion. However, the market had hoped that shedding this capital-intensive project would remove a major uncertainty, sending the stock up over 7% in early trade. But mid-session concerns ahead of the U.S. non-farm payroll data release overshadowed the positive news, dragging the stock lower and ending the day in line with other property stocks. New World fell 3.8% to HK$5.82; Henderson Land (00012) dropped 2.8% to HK$25.98; Sun Hung Kai Properties (00016) declined 2.3% to HK$106; CK Asset (01113) fell 1.8% to HK$45.9; Sino Land (00083) dropped 2.4% to HK$10.05.
Tech and internet stocks fell across the board; Tencent (00700) declined 2.3% to HK$421.2; Alibaba (09988) fell 2.1% to HK$104.4; Xiaomi (01810) dropped 4% to HK$24.24; JD.com (09618) fell 1.3% to HK$102.9; Baidu (09888) declined 3% to HK$83.2; Kuaishou (01024) plunged 4.4% to HK$29.58. (hc)
The weakening support for Hong Kong stocks due to the halt in northbound flows was expected, but the index's decline of over 700 points exceeded general market expectations. With reduced trading volume due to the northbound flow suspension, market direction is typically dominated by index futures. Today's breach of heavily concentrated long positions and consecutive breaks below 24,000 suggest a weakening outlook for Hong Kong stocks. With the Hang Seng Index now below 24,200—the support level seen in March this year—if it can hold this level, there remains hope for forming a pattern resembling a head-and-shoulders bottom. However, today's sharp drop has reinforced the downward channel trend since late August. Short-term support for the index is expected at 23,800; if support remains weak next Monday, the next key level would be 23,000.
*HSBC faces strong selling pressure from major investors, requiring time to digest; refrain from aggressive bottom-fishing below HK$150*
The UK Labour government, struggling with fiscal issues, is rumored to be planning to increase the 'additional bank tax,' which currently generates up to £2.6 billion (approximately HK$27 billion) annually for the UK government. HSBC (00005), the largest heavyweight in Hong Kong stocks, bore most of the market's selling pressure today, plunging 5.38% or HK$8.5, closing at HK$149.5 and losing the HK$150 level. Standard Chartered (02888) also fell 5.97% to HK$229.8.
HSBC's turnover exceeded HK$3.7 billion today, an increase of over HK$2.4 billion from the previous day. The active buy-sell ratio for HSBC was 49:51. For large traders with transaction sizes between HK$2 million and HK$5 million, the active buy-sell ratio was 46:54. The selling pressure intensified among larger trades, with ultra-large traders (transactions over HK$10 million) showing a buy-sell ratio of 19:81, indicating strong selling pressure from major investors. In contrast, retail investors showed a buy-sell ratio of 70:30, suggesting retail investors absorbed more of the current selling. Additionally, HSBC's current price has broken below its 100-day moving average, a rising trend line in place for two years, and also breached the key support level of HK$150. Aggressive bottom-fishing at current levels is unadvisable in the short term. Investors should wait and observe whether clear support emerges near or below HK$150 next Monday before considering adding positions.
*Financial stocks broadly slump; New World's airport project divestment fails to counter market-wide selling pressure*
With high U.S. bond yields, financial stocks came under broad pressure, especially international financial names. HSBC fell 5.4% to HK$149.5; Standard Chartered (02888) dropped 6% to HK$229.8; AIA (01299) declined 6% to HK$69.2; Bank of China Hong Kong (02388) fell 3% to HK$50.7; CCB (00939) dropped 2.7% to HK$9.555; ICBC (01398) fell 3.3% to HK$7.455; Ping An (02318) declined 1.4% to HK$52.
New World (00017) announced it will pay a total of HK$2.3 billion in early termination fees to the Airport Authority and will return the entire 11 SKIES project to the Airport Authority on April 1 next year, resulting in a net loss of approximately HK$18.3 billion, already reflected in its financial results for the year ended June. This loss contributed to a total loss of around HK$28.15 billion for the year ended June 30, significantly wider than last year's loss of approximately HK$16.3 billion. However, the market had hoped that shedding this capital-intensive project would remove a major uncertainty, sending the stock up over 7% in early trade. But mid-session concerns ahead of the U.S. non-farm payroll data release overshadowed the positive news, dragging the stock lower and ending the day in line with other property stocks. New World fell 3.8% to HK$5.82; Henderson Land (00012) dropped 2.8% to HK$25.98; Sun Hung Kai Properties (00016) declined 2.3% to HK$106; CK Asset (01113) fell 1.8% to HK$45.9; Sino Land (00083) dropped 2.4% to HK$10.05.
Tech and internet stocks fell across the board; Tencent (00700) declined 2.3% to HK$421.2; Alibaba (09988) fell 2.1% to HK$104.4; Xiaomi (01810) dropped 4% to HK$24.24; JD.com (09618) fell 1.3% to HK$102.9; Baidu (09888) declined 3% to HK$83.2; Kuaishou (01024) plunged 4.4% to HK$29.58. (hc)
