① Selling pressure surfaced as the Hang Seng Index barely held above the 26,000-point mark; how are institutions perceiving the upcoming market direction? ② Physical assets and sectors benefiting from conflict gained preference; what short-term prospects are available?
Cailian Press, March 2nd (Editor: Feng Yi) Today, the Hong Kong stock market experienced a downturn, with the Hang Seng Tech Index plummeting by 2.89%. The Hang Seng Index and the China Enterprises Index saw declines of 2.14% and 1.78%, respectively.
Market Sentiment Analysis
[A sentiment of risk aversion led to significant selling pressure in the market, causing the Hang Seng Index to struggle to maintain the 26,000-point threshold]
Today, on the trading board, major technology stocks faced significant declines, with Xiaomi experiencing a drop of around 5%. Meituan, Alibaba, and Baidu each fell by over 4%, while Kuaishou and JD.com also saw considerable decreases. In contrast, Tencent showed relative stability, with a modest decline of just 0.77%.
In various sectors, the whole financial industry experienced a downturn, primarily driven by major stocks like China Life Insurance and China Construction Bank. Furthermore, several sectors such as aviation, software, photovoltaics, real estate, semiconductors, and home appliances saw a combined decline.
Technology Stocks Decline
Amidst emerging industries, increased geopolitical tensions fueled advancements in gold, oil, shipping, and other sectors that benefited.
The market was unexpectedly taken aback by the abrupt rise in geopolitical tensions, leading to a significant increase in risk-averse attitudes among investors.
While the Hang Seng Index successfully held above the 26,000-point mark at the close of trading today, the session experienced significant trading activity totaling HKD 357.679 billion, characterized by noticeable panic selling amid intense skirmishes between buyers and sellers.
Impact of Conflict on Assets
Moreover, regarding short-selling activities, the total amount for the day reached HKD 49.136 billion, which represented 13.74% of the turnover for the Hang Seng Index, with the share of short-selling capital also hitting a peak level.
Among the top three companies for short-selling amounts were Xiaomi Group-W, Alibaba-W, and Tencent Holdings, with figures of HKD 3.242 billion, HKD 2.718 billion, and HKD 2.393 billion, respectively.
[Trending industries are experiencing more downturns than upswings; concepts benefiting from conflict emerge as leading short-term selections]
Short-Term Market Prospects
Regarding market activity, many of the leading sectors in Hong Kong’s stock market saw declines today. Furthermore, the Asia-Pacific stock exchanges generally exhibited weak performance, with the MSCI Asia-Pacific Index finishing down by 1.73%. Concepts that benefit from safe-haven investments and conflict have surfaced as notable short-term market themes.
The ongoing situation in the Middle East has directly influenced energy supplies, making sectors such as oil and gas, oil services, and oil transportation prime candidates for capital investments. Additionally, resource stocks like gold and non-ferrous metals have attracted considerable interest as well.
In the near term, the market has been influenced by unexpected ‘black swan’ events, where emotional factors have taken precedence, possibly necessitating a risk mitigation process. At the same time, the significance of medium- to long-term considerations regarding earnings and policies has momentarily been sidelined.
[The A-share market finishes higher with a boost in trading activity, as institutions remain hopeful for the ongoing spring rally]
Interestingly, the A-share market exhibited notable resilience today, with the combined trading volume of the Shanghai and Shenzhen stock exchanges hitting 3.02 trillion yuan, reflecting an increase of 532.7 billion yuan from the prior trading session. Nevertheless, over 4,200 individual stocks in the market still ended the day in the red.
Everbright Securities indicated that the sustainability of the spring rally is fundamentally unchanged. Among the two key factors, the execution of policies during the National People’s Congress will serve as the main driver for market fluctuations, whereas geopolitical tensions are simply temporary emotional reactions that are unlikely to impact the mid-term direction of the A-share market.
As we look forward, CITIC Securities Research has observed that both internal and external disruptions have intensified, with opposing bullish and bearish influences still at play. The anticipated spring rally is poised to enter its concluding stage, shifting from a rising trend to a phase of consolidation. The geopolitical tensions between the U.S. and Iran are expected to persist in the near future, potentially leading to sustained strength in global oil and precious metal prices, with strategic assets likely to maintain a premium valuation over the long term.