Investment 2/1/2024

The last trading day of Hong Kong stocks in 2023 was very weak and the market closed just shy of 17,000. After the Hang Seng Index opened 22 points higher, it rose as much as 51 points to reach a high of 17,095 points. Afterwards, the market's upward trend was unsustainable and fell as much as 93 points to 16,950 points. It finally closed at 17,047 points, up 3 points; the tech index did not rise or fall, closing at 3,764 points. The main board transaction volume exceeded HK$75.1 billion. 

In one year, the Hang Seng Index has fallen by 2,734 points or 13.8%. It has fallen for four consecutive years, the longest falling wave in history. It has fallen by more than 10% for three consecutive years, which is the first time since 2000 to 2002. The tech  index fell 364 points or 8.8%. On a quarterly basis, the Hang Seng Index fell 762 points, or 4.3%; the tech index fell 156 points, or 4%, falling for three consecutive quarters. 

The mainland stock market rebounded, the U.S. dollar fell, the yuan strengthened, and with the support of the window dressing effect, the Hong Kong stock market barely stayed above 17,000 on the last trading day last year. As most of the funds were closed and there was a strong wait-and-see atmosphere, the market turnover was only over HK$70 billion. The market expects that the Federal Reserve will cut interest rates in the first quarter of 2024, and funds will have the opportunity to flow into non-US dollar markets. However, the trend of Hong Kong stocks still depends on the progress of the mainland's economic recovery, especially due to the drag on the real estate market, which may take a long time to improve. It is believed that Hong Kong stocks will have little momentum to rise next year, and the Hang Seng Index is expected to fluctuate between 16,000 and 18,000 points in the first quarter. 

Trading in the foreign exchange market was quiet last Friday, with the U.S. dollar index falling as much as 0.16% to 101.066, the Euro rising 0.21% to $1.1084, and the yen once falling 0.35% to 141.91 per dollar. For the whole year, the Bloomberg U.S. Dollar Spot Index fell 2.7%, its worst performance since 2020. Most of the decline came from the fourth quarter, reflecting rising market expectations for the Federal Reserve to cut interest rates next year. Among the major currencies, the pound appreciated by more than 5% against the U.S. dollar last year, the strongest since 2017, and the Swiss franc soared by 10% against the U.S. dollar, the strongest since 2010. On the other hand, the yen fell by more than 7% against the U.S. dollar. 

Before the holidays, European stock markets remained stable, with British, French and German stocks closing up 0.14%, 0.11% and 0.3% respectively. To sum up, in 2023, the three major indexes of Britain, France and Germany each gained 3.78%, 16.52% and 20.31%. 

Investors made profits by selling before the New Year holiday. On the last trading day of 2023, the U.S. stock market retreated from its historical high of 37,710 points. After opening slightly lower by 8 points, the Dow once rose by 49 points, reaching a market high of 37,759 points. , but soon fell back, once falling 171 points to a low of 37,538 points; the S&P 500 index rose slightly by 0.11% to 4,788 points in the early stage, continuing to approach a record high; the Nasdaq, which is dominated by technology stocks, fell by up to 0.93%. 

At the close of the U.S. market, the Dow Jones Industrial Average fell 20 points, or 0.05%, to 37,689 points; the S&P Index fell 13 points, or 0.28%, to 4,769 points, rising 24% for the year; the Nasdaq closed down 83 points, or 0.56%, to 15,011 points.

 For the whole year, the Dow Jones Industrial Average still rose 13%, the Nasdaq jumped 43%, and the S&P Index climbed 24% throughout the year.

 Investors are relatively optimistic about the outlook for U.S. stocks. With the expected soft landing of the economy and expectations of interest rate cuts, U.S. stocks are expected to reach a higher level. However, considering that U.S. stocks have accumulated considerable gains and the market has been overbought for a long time, it cannot be ruled out that it will need to consolidate at high levels in the short term before challenging record highs again.