pennfierce3handle| Hong Kong stock transactions shrink to nearly HK$130 billion, institutions say selling pressure is not high

Source Finance Union

On May 23, Hong Kong stocks continued to adjust, with the Hang Seng Index falling 327 points or 1% throughout the day.Pennfierce3handle.7% to close at 18868 points. The Hang Seng Composite Index fell 2.4% to 3896. The turnover in the big market was only 129.9 billion Hong Kong dollars, and the volume shrank under the falling market, indicating that there is little selling demand, which is a positive signal.

Hong Kong stocks have a net inflow of HK $3.51 billion, considering that the Hong Kong stock market has adjusted by about 4.2%, the current domestic capital flow is not large.

On the market, the plate fell almost across the board, and only 337 stocks rose on the main board, falling.Pennfierce3handleAs many as 1176. Oil and coal were among the few sectors that rose, while shares of 1024 HK, which performed better than expected, rose 1.7 per cent.

The next night, the Federal Reserve released the minutes of the FOMC meeting in May. Officials unanimously hoped that interest rates would remain high and that it would take longer to observe the progress of the decline in inflation. The yield on 10-year US Treasuries had not changed much, and the minutes of the FOMC meeting were not the main reason for the adjustment of Hong Kong stocks.

The upward trend of Hong Kong stocks since late April is mainly due to valuation and risk preference repair, supported by transactional capital, short position cover and some foreign capital return, but the downward trend of Hong Kong stock earnings forecast to ease the overall downward trend has not been completely reversed.

This rally in the Hang Seng Index, market sentiment and capital side are similar to the rise in the "economic restart" trading at the end of October 2022, but the core behind it is the market's expectations of the current fundamentals of China's economy. Although the Hang Seng index has rebounded 22.8 per cent from its peak since late April, the yield on Chinese 10-year government bonds has remained low at 2.3 per cent over the same period, superimposed by the recent weakening of the offshore renminbi back to 7.25 levels. reflects investors' cautious view of China's long-term inflation and growth prospects.

At present, most of the valuations of Hong Kong stocks have been repaired, and the risk premium has returned to the relatively extreme level of rolling two years. The 20-day moving average PUT/CALL ratio of the Hang Seng Index rose to 1.12 times, which is often a harbinger of a periodic peak for Hong Kong stocks.

In addition, the pressure on covering short positions has subsided, and the short selling ratio of Hong Kong stocks continues to decline as the index rises. The current market short selling ratio excluding TraHK is only 12.5%, almost to the lowest level in recent years. When the short selling pressure almost recedes, it also indicates a reduction in the fuel (short position covering) that will drive the market up later.

Sino-Thai International believes that the short-term adjustment of Hong Kong stocks, digesting overbought is not a bad thing, after the adjustment is expected to hit a new high. The short-term support levels of the Hang Seng Index are 18800 and 18300 respectively.

As of May 23, the long-term market width (the ratio of share prices higher than the 200-day moving average) of the Hang Seng Index and the Hang Seng Composite Index reached 62.2% and 54.6% respectively. The long-term market width of Hong Kong stocks has broken through the 50% bull-bear dividing line, which is still far from the 80% overbought area, indicating that medium-and long-term waves have been confirmed.

Historically, when Hong Kong stocks turned from a bear market to a bull market, the long-term market width basically rebounded from a level of less than 20%, and Hong Kong stocks had a medium-and long-term sustained upward trend.

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