Growth Dragons Weekly: Hong Kong Stocks Rally 11%, with Hang Seng Crossing 22,000 Points to Hit a 2-Year High
Plus: Huawei’s AI Ambitions, EV Sales Boom, Gaming Approvals, and JD Industrials’ IPO
What happened in China this week:
Hong Kong Stocks Rally 11%, with Hang Seng Crossing 22,000 Points to Hit a 2-Year High
Could Huawei Be China’s Nvidia?
China’s EV Sales Surpass 1 Million a Month, Outselling Gasoline Vehicles
China Continues to Loosen Grip on Gaming with Approval of 109 New Game Licenses
JD Industrials Files for Hong Kong IPO
#1 Hong Kong Stocks Rally 11%, with Hang Seng Crossing 22,000 Points to Hit a 2-Year High
While China’s A-share markets were closed this week for the National Day celebrations, the Hong Kong stock market took just a single day off, continuing to trade for the remainder of the week. Despite the absence of southbound buying from mainland investors, the Hang Seng Index (HSI) surged 11% this week. Year-to-date, the index is up an impressive 35%, making it one of the top-performing indices globally. Foreign investors were the driving force behind the rally, indicating a strong return of aggressive fund flows into the market.
Below are the top 10 gainers within the HSI, with SMIC leading the charge, posting a 47% gain. Troubled stocks like Wuxi Bio, Wuxi AppTec, and Longfor also saw significant gains this week, reflecting a broader risk-on sentiment. Higher-beta stocks have outperformed more stable companies, suggesting that investor appetite for risk is on the rise.
From a technical analysis standpoint, the HSI achieved several important milestones. First, it surpassed the lows reached during the COVID-19 crisis. Second, it has broken through to a 2-year high, surpassing the previous peak from the year-end rally of 2022. The index is now testing the critical 22,000 level, and encouragingly, it closed above this threshold. However, a sustained break above this level is necessary to confirm the start of the next phase of the bull run.
Given that this is a key resistance level, we anticipate some price reactions around 22,000. The current price formation suggests the possibility of a bull trap, indicating that a short-term pullback could occur. That said, we remain optimistic about the continued bullish momentum in Hong Kong stocks. Depressed valuations and renewed investor interest present strong opportunities, and we believe any dips will offer attractive entry points for those looking to capitalize on this rally.
#2 Could Huawei Be China’s Nvidia?
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