Hang Seng technology index new low, capital markets have abandoned logic in the fall?

2022-05-02 0 By

Hong Kong stocks continued to retreat.On Monday (March 14), Hong Kong’s capital market was in a mood of pessimism. The Hang Seng Technology Index closed down 11.03%, the biggest one-day drop since the index was launched on July 27, 2020. The Hang Seng Index closed down nearly 5%, breaking a new six-year low, and has returned to the level of February 2016.All sectors fell, with technology networks, real estate, pharmaceuticals, automotive shares leading the decline.Among individual stocks, Meituan fell about 17%, Alibaba fell more than 11% and Tencent Holdings fell nearly 10%.The fall in Hong Kong stocks continued on Tuesday, with the Hang Seng Technology index falling at the opening bell and at one point falling more than 7% in early trading, with the index falling as much as 4.78%.The Hong Kong city magnate is leading the drop in Hong Kong city.Internet giants, particularly those listed in the US and Hong Kong, have played a central role in the sell-off.On March 14, Alibaba closed down 10.90%, JD.com 14.77% and Meituan 16.84%.Chinese stocks fell across the board on Friday, with IQiyi down 13.40% and Xiaopeng Auto, Baidu and Pinduoduo all down more than 10%.On the one hand, China concept shares in the US capital market uncertainty transmitted to Hong Kong stocks, the market can only use the decline to digest.On the news, the US Securities and Exchange Commission (SEC) disclosed five companies that have been identified under the Foreign Corporate Accountability Act.That has heightened investor concerns about a possible future mass delisting of Chinese stocks.Baba.us shares now trade at $77.76, even lower than when the company listed in the US in 2014.Big banks are also slashing Alibaba’s share price.Jpmorgan analyst Alex Yao downgraded Alibaba to underperform from overweight and lowered her price target to $65 from $180.The analyst said a large number of global investors are reducing their investments in China’s Internet sector due to rising geopolitical and macro risks.Alibaba, one of China’s most widely held Internet stocks, will continue to face selling pressure in the near term.Bad news quickly began to ferment in Hong Kong stocks.Gen gold letter fund manager assistant Zheng Jian said to the media, “almost weighs almost ownership shares in all parts of the United States, Hong Kong dual-listed, so almost strands of ADR in American investors sell shares lead to share price falls, dual-listed stocks share has also been a drag on falling, and Hong Kong share drop dual-listed shares must be greater than the weight of only listed in Hong Kong.”On the other hand, as pessimism spreads in Hong Kong, market rumours are also circulating.This round of decline in Hong Kong stocks was previously rumored to be related to the recent international tensions that led to a large liquidity gap in international funds tracking emerging market indexes including MSCI, FTSE and other international indexes.In this regard, a brokerage chief strategy analyst said that the performance of South Korea, India and other peripheral markets on the 14th, the rumor should be false news.Currently, China (31.76 percent), India (12.37 percent), South Korea (12.26 percent), and Brazil (4.98 percent) account for the largest share of the MSCI emerging market index.In other words, if there is a large liquidity gap, India, South Korea and Brazil will also be affected, but these capital markets were relatively stable on The 14th.Hong Hao, managing director and chief strategist of BoCOM International, said it was not surprising that the Hang Seng Technology Index fell 7 or 8 percent today as Internet technology had already suffered a big drop in the US stock market on Friday night.The weighting of tech stocks in the Hang Seng index has risen to the low teens, Hong explained, “so tech volatility, both in terms of points and sentiment, can hit the market.”In addition, as for the sharp decline of Hang Seng Science and Technology Index, market analysis said that hang Seng Science and technology index itself is a very volatile index, because the number of weighting stocks is small, and 86% of the weight is concentrated in the top 15 or so objects, so the performance of several companies is easy to cause significant changes in the index.At present, hang Seng Science and Technology index has a total of 30 constituent stocks, the proportion of the top for Kuaishou, Tencent Holdings, JINGdong Group, Alibaba, Shunyu optical technology, Millet group, 19 stocks for information technology enterprises, is the main position of this round of sharp falls.Is there any logic to capital markets?Not only Hong Kong stocks are experiencing A decline, the A-share market is not optimistic, March 14, a-share unilateral downward all day, major indexes have fallen sharply.On March 15, the three major a-share indexes continued to fall, the Shanghai Composite index fell 4.95%, losing 3100 points, shenzhen Component index fell 4.36%, gem index fell 2.55%, more than 4400 stocks in the two cities fell.For the a-share decline this round, Cathay Fund believes that it is A serious emotional catharsis, and there are three deviations — one is the a-share in-depth adjustment and domestic policy easing and steady growth of the keynote serious deviation;Second, investors’ pessimistic mood deviates seriously from the sound economic fundamentals in China;Third, the current valuation level of A shares deviates significantly from historical and globally comparable valuation levels.’The normal trading range for A-shares this year is just below 3,200 to just below 3,800, but the worst-case scenario will be just below 3,000, mainly because there is no way to predict A lot of things happening now,’ Mr. Hong said.Hong Kong stocks are more complicated.Hong hao said that the previous model strategy, the bottom was around 22,000 to 23,000, but now it has broken through this range, falling by about 10%.”I don’t think fundamentals are relevant anymore. Everyone is preparing for a worst-case scenario.”In addition, a brokerage overseas strategy analyst said, “the main reason is still in the continuous decline process, the market appeared liquidity risk, and the fundamentals and valuation of what are not much.”However, private equity that the current investment value of Hong Kong stocks is very obvious, full of confidence in the future market.’If you look at history, big declines are good opportunities,’ says Ding Ying, chairman of Kommand Capital.Hang Seng Technology index recorded the biggest drop in history, the market sentiment is more panicky, but the big risk is released, the next opportunity outweighs the risk.Hang Seng index, Hang Seng Technology index valuation is near the historical median, but some stocks in low volume amplification, indicating that the more people buy more.As far as individual investors are concerned, Hong Hao believes that when risks come, it is most important to keep your hands in check.Cheap does not mean that is the lowest point, now to enter the market to copy the bottom to bear a lot of risk, especially retail investors have no risk tolerance.(Yang Yaru, editor of Ti Media App, integrated ifeng.com finance, China Fund News, Caijing and Daily Business News)