May 07, 2024

The inflows to the Hang Seng index continue with the price breaking out. 

HK50-–-Daily-ChartHK50 – Daily Chart 

The HK50 index has broken above 18,385 and now looks at higher resistance levels. 

Hong Kong stocks extended their gains towards an eight-month high after mainland traders, returning from a five-day holiday, added to recent inflows, fueling optimism. Strong travel data and positive calls from investment banks further lifted the mood, indicating a positive outlook for the market. 

With the Federal Reserve holding interest rates steady, investors from the US are seeing Hong Kong as a diversification opportunity. 

Global investment banks, including Goldman Sachs, UBS, and BNP Paribas, have become more positive on Chinese stocks. Foreign investors jumped in for a third month in April when China’s State Council issued new guidelines to support the $9 trillion stock market. 

The potential ceasefire in the Middle East also supports the price of stocks globally. 

The next major catalyst for Hong Kong stocks, which could drive the market further, comes from consumer indicators. Preliminary consumer data on Chinese travel over the “golden week” holiday shows robustness in travel. Flight booking volumes hit a post-Covid record, and intercity mobility has surged. According to the National Bureau of Statistics, the March consumer confidence index has reached a one-year high, promising for the market’s future. 

The market is now focused on the first green shoots of growth in mainland China and Hong Kong. Economic growth in both markets is coming in higher than expected, and global growth appears to be re-accelerating, with hints of peace in the Middle East. We are still far from the levels seen in Hong Kong’s equity boom, but the path has been unclear for years.

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