Paragraph 1: Market Overview and DeepSeek’s Influence
Financial markets experienced a relatively quiet period due to the extended Chinese New Year and Korean New Year holidays, with Mainland China, Indonesia, Malaysia, Taiwan, and South Korea closed for celebrations. Hong Kong, open for a half-day session, saw a modest uptick driven by internet giants like Tencent, Xiaomi, Alibaba, and Baidu. The notable influence of DeepSeek, an AI entity, was evident in the underperformance of utilities and energy-related sectors, suggesting a potential recalibration of anticipated AI-driven energy demands. DeepSeek’s advice to a Mainland reporter regarding A-share market success emphasized investing in fundamentally strong, policy-backed leading companies with favorable technical indicators. The decline in US technology stocks also drew attention, highlighting the region’s exposure to this sector.
Paragraph 2: Developments in China’s Property Sector and Resumption of India-China Flights
China’s struggling state-owned enterprise (SOE) developer, Vanke, saw its shares rise following the appointment of Shenzhen Metro Chairman Xin Jie as Vanke’s new Chairman. This move fuelled speculation about potential government intervention and support for the embattled company, raising the possibility of nationalizing property developers as a solution to ongoing sector challenges. Encouraging news emerged regarding China’s property market, with a reported 33% year-over-year increase in new home sales in major cities during January. Geopolitical relations saw a positive development with the agreement between India and China to reinstate direct flights, marking a step towards improved bilateral ties.
Paragraph 3: Reflecting on the Year of the Dragon and Welcoming the Year of the Snake
The conclusion of the Year of the Dragon brought solid returns for the Hong Kong market, with the Hang Seng index gaining 33% and the Hang Seng Tech index surging by 50% over the past year. While the actual start of the Year of the Dragon fell in mid-February of the previous year, the overall performance exceeded investor expectations. This positive trend, characterized by higher highs and higher lows, fuels hopes for continued market strength in the upcoming Year of the Snake.
Paragraph 4: Hong Kong Market Performance and Sectoral Trends
Hong Kong’s Hang Seng and Hang Seng Tech indexes recorded marginal gains of 0.14% and 0.77%, respectively, during the half-day session. Trading volume significantly declined, reflecting the holiday period and reduced market participation. Market breadth favored declining stocks, with 306 stocks retreating compared to 172 advancing. Short selling activity also diminished considerably. Growth and small-cap stocks outperformed their value and large-cap counterparts. Sectoral performance saw technology, consumer staples, and communication services leading the gains, while materials, financials, and energy experienced declines. Within these broad sectors, sub-sectors like consumer staples, household/personal products, and technology hardware performed well, while national defense, nonferrous metals, and coal lagged. Southbound Stock Connect, a trading link between Hong Kong and Mainland China, remained closed due to the holidays.
Paragraph 5: Mainland China Markets Closed and Upcoming Webinar Announcement
Mainland China’s stock markets, including Shanghai, Shenzhen, and the STAR Board, remained closed for the Chinese New Year holidays. Looking ahead, a webinar titled "2025 Outlook: Investing in AI’s Present and Future" is scheduled for February 6, 2025, offering insights into the evolving landscape of AI and its implications for investment strategies.
Paragraph 6: New Content and Market Data Availability
New research content titled "2025 China Outlook: A Recipe For Re-Rating" provides an in-depth analysis of the Chinese market’s prospects. Market data related to exchange rates, prices, and yields were unavailable due to market closures.
