January proves to be no respite for the index, which again sputters after last week’s short-lived rally. 

If there is any solace for the downtrodden equity investor in Hong Kong, it might well be that the new «Hang Seng Indexes» homepage looks very slick and fancy. Still, the fresh gloss doesn’t change the fact that putting money on horses at the Jockey Club seems to be the much safer bet right now.

To wit, there was a brief rally last week after the government on the mainland instituted several support measures and signaled a clear willingness to support markets here and in China.

Roller Coaster

The net result? For now - one big nada. On Tuesday, the index was down more than 2.3 percent, testing the mid-15,000s. When we wrote a piece on the market at the end of last week, the index had been keeping the chart technicians in thrall by repeatedly probing support around the 16,000s.

An entire lifetime has almost passed before our very eyes since then, probably helping to add a grey hair or two to the head of the average local broker. The index rose more than 3.5 percent last Wednesday, and almost 2 percent on Thursday. But that was it. On Friday, it fell 1.6 percent and yesterday it stopped at a relative standstill before sinking to its current level.

Many Reasons

According to the «South China Morning Post» (registration required, eventual paywall), it is the worst January for the market since 2016, as the index lost more than 7 percent this month alone.

As finews.asia has extensively written, there several reasons to explain what is going on. But maybe the most important thing is the call by global banks for authorities to do more to support the markets, as we reported earlier today. The natural implication to that question at this point is whether anything they can do ever be enough – and everyone will have to wait to see the answer to that.

Twin Disappointments

A market note from Sunday by Qi Wang, the co-founder of Megatrust Investments, a Chinese equity boutique, has a clear take on what is going on.

He believes the main problem is that China currently has a «twin disappointment problem», meaning by implication that economic developments are sub-par and last week’s policy announcements not enough.

Not Enough of Anything

«It’s too early to debate what stimulus China should use, and whether such policy will be effective. At the current valuation level, the market just needs to see the Chinese government trying hard to stop the bleeding. The gesture is more important than anything else,»  he indicated.

Julius Baer, for its part, almost mentioned the mainland equity market as a little more than an aside in its 2024 outlook for equities with a brief, pithy sentence: «For China, we remain on the sidelines, as we wait for the bottoming process to unfold.»

Protracted Decline

If it is of any comfort, few in Hong Kong are paying, much, if any, attention. This is the fourth consecutive year of decline, and the market is now down way more than half from its all-time high of slightly more than 33,000 eked out in distant 2018.

Instead, many are likely logging into their much-used VPNs in an attempt to watch «Expats» on Amazon Prime, reminded of Nicole Kidman’s surprisingly quarantine-light visit during the height of the pandemic, a time when even the most lucrative of banking rainmakers had to pay their dues by being confined to lengthy hotel stays.

Weighty Issues

Others are probably watching developments on the consultation paper and briefing in the legislative committee underway related to the national security law first imposed in 2020, something finews.asia (collated search engine results) extensively reported on at the time.

Whatever the case, and excuse the geopolitics, it is a heavy load of big, weighty stuff to worry about. 

Going to the Races

To take the average bank employee’s mind off the uncertainty of pretty much everything right now, and get their eyes off the red numbers plastering their smartphones, we might suggest going to the Jockey Club's 2024 Chinese New Year Raceday. 

Their catchphrase is «Gallop into Good Fortune». At the very least, as we dive headlong into the normally propitious Year of the Dragon, it sounds like it can’t hurt.