Hong Kong stocks are suffering seriously from the bearish pressure. The Hang Seng Index has fallen on 4 consecutive days, hitting a new low at 16,832.36 since November 2011.
The index plunged below 17,000 points for the first time in over a decade showing the reaction of the market as the Chinese Communist Party tightened COVID curbs, and vows to stick with the controversial pandemic strategy.
Investors became pessimistic over the economic outlook, and had to cope with the U.S.’s crackdown on Chinese tech firms, intensive interest rate hikes, and deflating property bubbles making them rotate away from Asian stocks.
Hong Kong’s Hang Seng Index tumbled 2.23% while Hang Seng Tech Index fell 3.55% to 3,278.24 points on October 11. One hundred and fifteen stocks advanced and 364 plummeted. Main Board short selling declined -13.09%, which is 95% of the 1-year average, as 22% of all trading was short.
Exchange rate pressure is another cloud engulfing Hong Kong’s financial market. According to Secretchina, May 12, although the Hong Kong Monetary Authority has accumulated 34 purchases of Hong Kong dollars, totaling 218.961 billion Hong Kong dollars, the current exchange rate between the Hong Kong dollar and the US dollar is extremely close to the 7.85 weak-side exchange guarantee.
Since 2000, the Hang Seng Index has bottomed five times in April 2003, October 2008, October 2011, February 2016, and March 2020. Market participants are trying to predict when will be the end of this stiff-down trend.
Peter Lewis, a former investment banker and host at Radio Television Hong Kong, said, “It’s connected to several things all going on at once – the “zero-COVID” policy in China, worsening economic data from the mainland, rising interest rates globally, the Ukraine war, the property crisis on the mainland, and now the Biden administration cutting off China from most advanced U.S. semiconductor technology, which is sending chip stocks in Hong Kong, China and around the world plunging.”