The global situation this year is turbulent, and the epidemic has been repeated, and the economies of all countries have been greatly affected. Therefore, the stock markets of major countries around the world have fallen. Since the beginning of this year, the decline of major global stock markets is as follows: A shares Shanghai Composite Index fell 16.78%, US stock Dow Jones Index fell 15.07%, FTSE 100 in the UK fell 7.33%, Hong Kong stock Hang Seng Index fell 30.84%, etc.
Comparison of Hong Kong stocks is definitely the one with the major stock markets that have fallen the most, and it also has the longest decline. It has not rebounded well since February 18, 2021. If we start from the highest point of 33484.08, the Hang Seng Index has fallen 51.59% by the close of last week.
Image source Oriental Fortune
1. Why did Hong Kong stocks fall so much?
1. The international environment is not ideal (US hike rate , Russian-Ukrainian conflict, European turmoil, etc.) Various conflicts continue, coupled with repeated epidemics;
2. Hong Kong stocks are greatly affected by the Chinese and US stock markets, and capital games, and the Chinese and US stock markets plummeted, so Hong Kong stocks naturally cannot survive alone;
3. The weighted stocks of the Hang Seng Index are mainly several major banks and Internet companies such as Alibaba , Tencent , Meituan , and Meituan . The Internet and banking sectors are not doing well this year, and the valuations of major banks are lower than 99% of the history. The share price of Tencent, the leader of Hong Kong stocks, fell from 447.782 yuan to 232.8 yuan this year, a drop of 48.01%, setting the largest annual decline since Tencent went public, and its stock price hit a new low in the past five years.
Image source Oriental Fortune
2. How should we deal with it?
First compare the 2008 financial crisis in the darkest period of Hong Kong stocks. The Hang Seng Index in Hong Kong stocks fell 48.35% in 2008, and at the most, it fell 61.67%.
is much better than that year. First, although the current global economy of has been affected to a certain extent, it is far from the situation of a financial crisis; second, Hong Kong is now much stronger than Hong Kong in 2008. Therefore, I think the current Hong Kong stocks are already very cost-effective and have outstanding medium- and long-term allocation value.
This can be seen from the direction of southward capital. Recently, southbound funds have net purchases of for 12 consecutive trading days. On the 21st, wind data showed that southbound funds have net purchases of 3.408 billion Hong Kong dollars throughout the day. The time has been extended. Since September 27, southbound funds have been net buying for 12 consecutive trading days. The net purchase amount this week was approximately HK$25.698 billion. As of October 21, southbound funds had a net inflow of HK$293.349 billion in 2022. It can be seen that under this complex market situation this year, Hong Kong stocks have attracted investors.
Image source wind data
Summary: In the short term, you can wait for to build the bottom and then buy in or increase your position. If it is medium and long term, now or the time is good, you can invest in batches and buy.
and when we choose an industry, you must know that not every industry can buy more and more as you fall, because you are likely to fall into the trap of low valuation. Instead, we are optimistic that this industry has potential in the future and demand is increasing. Now we are just in trouble. Only when we fall, we can buy more and firmly hold on.
Of course, Hong Kong stocks can also rise when encountering a bull market, but whether it can break through the previous historical highs is a question mark!
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