《Luk's View》After the U.S. released CPI figures higher than market expectations, investors worried about further rate hikes, causing significant corrections in U.S. AI and technology stocks, affecting global stock markets. With the U.S. midterm elections approaching in early November, overall trading volume in the U.S. stock market is expected to shrink noticeably, reflecting a cautious market sentiment. However, this does not mean the stock market will remain calm. Frankly speaking, I believe that both the current U.S. market and markets in Japan, South Korea, and Hong Kong have become playgrounds for big players, who are clearly exploiting news to create sharp volatility.
Sharp-eyed investors will find it not difficult to notice that recent focus has centered on the trend of U.S. interest rates. Under inflationary pressure, the market has long expected rising U.S. rates, causing U.S. Treasury yields to surge. Strangely, earlier when bond yields rose, U.S. AI stocks, related supporting sectors, and traditional software stocks also rose strongly. But two weeks later, under similar objective conditions, the trend reversed. This clearly indicates that it is essentially a large-scale capital manipulation game. Personally, I believe the U.S. market will become clearer after the midterm elections. Overall, many quality U.S. companies are still in a clear growth phase, and this volatile market environment is actually a good time to do research and buy quality stocks. As for the Hong Kong market, selling pressure remains evident, and the overall market will continue to fluctuate and adjust. However, the long-term stable stocks previously recommended, such as Lifestyle International (00331) and Sino Land (00083), have instead risen steadily against the market trend, reflecting that the Hong Kong market is clearly stock-specific rather than market-driven.
*Limited downside risk for A-shares*
Additionally, the Shanghai Composite Index opened lower on Thursday (15th) and continued to decline, briefly falling below the 3,700 level. In fact, the Shanghai Index has recently repeatedly tested its support at lower levels. Technically, the index has challenged the July low of 3,741 and is approaching the peak of last year's "924 rally" near 3,674, forming a double technical support. Recent A-share movements have already reflected most negative sentiment. However, from a valuation perspective, the Shanghai Index around 3,800 is gradually becoming attractive. The CSI 300's P/E ratio is about 13 times, at a near 10-year low; overall A-share valuations are around historical averages, and dividend yields are attractive, making them appealing for long-term funds (including insurance capital) to allocate. Moreover, with continued policy support (considerable room remains for combinations of monetary, fiscal, and industrial policies), most negative shocks largely digested, the third-quarter earnings season, and broad-based ETFs providing support at lower levels, the market may be approaching a recovery window. Overall, in terms of valuation and dividend yield, A-shares have reached attractive levels, and the downside potential is limited.
*The author does not hold the aforementioned stocks
*Articles published in Economic Times, signed or unsigned, represent the authors' personal opinions and do not reflect Economic Times' stance. Economic Times serves as a platform providing free expression of views.
Sharp-eyed investors will find it not difficult to notice that recent focus has centered on the trend of U.S. interest rates. Under inflationary pressure, the market has long expected rising U.S. rates, causing U.S. Treasury yields to surge. Strangely, earlier when bond yields rose, U.S. AI stocks, related supporting sectors, and traditional software stocks also rose strongly. But two weeks later, under similar objective conditions, the trend reversed. This clearly indicates that it is essentially a large-scale capital manipulation game. Personally, I believe the U.S. market will become clearer after the midterm elections. Overall, many quality U.S. companies are still in a clear growth phase, and this volatile market environment is actually a good time to do research and buy quality stocks. As for the Hong Kong market, selling pressure remains evident, and the overall market will continue to fluctuate and adjust. However, the long-term stable stocks previously recommended, such as Lifestyle International (00331) and Sino Land (00083), have instead risen steadily against the market trend, reflecting that the Hong Kong market is clearly stock-specific rather than market-driven.
*Limited downside risk for A-shares*
Additionally, the Shanghai Composite Index opened lower on Thursday (15th) and continued to decline, briefly falling below the 3,700 level. In fact, the Shanghai Index has recently repeatedly tested its support at lower levels. Technically, the index has challenged the July low of 3,741 and is approaching the peak of last year's "924 rally" near 3,674, forming a double technical support. Recent A-share movements have already reflected most negative sentiment. However, from a valuation perspective, the Shanghai Index around 3,800 is gradually becoming attractive. The CSI 300's P/E ratio is about 13 times, at a near 10-year low; overall A-share valuations are around historical averages, and dividend yields are attractive, making them appealing for long-term funds (including insurance capital) to allocate. Moreover, with continued policy support (considerable room remains for combinations of monetary, fiscal, and industrial policies), most negative shocks largely digested, the third-quarter earnings season, and broad-based ETFs providing support at lower levels, the market may be approaching a recovery window. Overall, in terms of valuation and dividend yield, A-shares have reached attractive levels, and the downside potential is limited.
*The author does not hold the aforementioned stocks
*Articles published in Economic Times, signed or unsigned, represent the authors' personal opinions and do not reflect Economic Times' stance. Economic Times serves as a platform providing free expression of views.
