Title: Hang Seng Technology Index Rises 20% in Two Months, Technical Bull Market Yet to be Confirmed
In recent months, the Hang Seng Technology Index has experienced a significant surge, climbing by 20% since its low point in May. The index’s recent performance has sparked speculation about whether it has entered a technical bull market, with market participants closely monitoring its progress.
On July 27, Hong Kong stocks continued their upward trajectory, buoyed by positive news such as expectations of an interest rate hike by the Federal Reserve and Volkswagen’s stake in Xpeng Motors (09868.HK). The Hang Seng Index rose by over 1.5% during the day, while the Hang Seng Technology Index experienced a surge of more than 3%.
The substantial increase in the Hang Seng Technology Index, coupled with market turnover surpassing HKD 100 billion, has led some industry insiders to believe that the index has entered a technical bull market. However, others caution that the trading volume of Hong Kong stocks remains limited, and further adjustments and consolidation are necessary to sustain the upward trend.
Analysts suggest that the second half of the year will be heavily influenced by half-year performance and policy aspects. The Federal Reserve’s announcement of a 25-basis-point interest rate hike, bringing the federal funds rate to a target range of 5.25% to 5.5%, aligns with mainstream market expectations after the June meeting. Despite this positive news, the Hang Seng Index on July 25 fell short of breaking through the June 16 transaction high of HKD 175.5 billion.
Cen Zhiyong, director of the Hong Kong Research Department of Metropolitan Finance, emphasized that while recent policies introduced by the central government have improved the trend of Hong Kong stocks, the outcome will depend on coordinated transactions. The feasibility of a bull market remains uncertain, as large-scale IPOs may mobilize market sentiment, but their success also hinges on policy implementation.
Xu Yibin, Chief Executive Officer and Executive Director of Bright Talent Securities, noted that the volatility of Hong Kong stocks throughout July can be attributed to the stagnant turnover, which consistently falls below HKD 100 billion. Factors driving the market’s volatility continue to be predominantly news-based. As the futures and index settlement week approaches, next week may witness further market volatility.
Wen Tianna, President of Broad Capital International, highlighted the ongoing consolidation pattern observed in Hong Kong stocks. The implementation of economic stabilization policies will continue to influence their trajectory. The interest rate trend has become clearer, and the global economic recovery faces challenges that are not as strong as anticipated. With uncertainties surrounding technology stocks, investors remain cautious, resulting in the turnover not fully aligning with the uptrend.
Ye Shangzhi, chief strategist at First Shanghai, emphasized that capital inflows play a critical role in driving the stock market. Thus, changes in market trading volume serve as a vital indicator to monitor. However, recent trading volumes have seen a decline, raising concerns about the sustainability of further capital investments.
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