Summary: The Hang Seng index has rebounded by 30% since January this year and the recent retracement has provided an opportunity for investors for further adding more stocks to their existing portfolio but with limited access to capital, how can investors capture this opportunity to enhance the return of the existing portfolio with the limit of capital.
The Hang Seng index has rebounded over 30% since the 22nd of January from 14,700 levels to 19,700 levels for about 5,000 points but since the 20th of May, the Hang Seng index has retraced 1,000 points for approximately 20%.
As what we have discussed in our recent Saxo Article, several points support the Hang Seng Index. The reduction of dividend tax for mainland investors in Hong Kong stocks which supports high-dividend stocks in particular Chinese banks, Telecoms, and energy companies as well as Hong Kong exchange and Chinese Securities firms.
The Export growth of China has rebounded significantly in April. The rebound has been contributed by selling more intermediate goods to ASEAN countries and India and also China CPI inflation picked up to 0.3% y/y in April. It is driven by increases in service prices particularly in tourism-related spending, air tickets, rental vehicles, and hotel prices.
In one of our more recent article Hong Kong Equity rally surpasses global Markets. The Low valuation relative to other financial markets, underweight position, and strong performance in large-cap China tech, healthcare, property, and insurance stocks have also attracted investors to the Hong Kong Markets.
Investors who have invested in the Hong Kong stock market in their existing portfolio and still have a positive view of the current trends see the recent retracement as an opportunity to invest more. However, the limited access to capital restricts investors from capturing such opportunities. One of the tools to help our investors is using Margin Lending.
Margin lending allows our investors to use their existing securities as collateral to enhance their buying power to buy more in stocks and ETF beyond the value of the cash and/or securities on their account. It works as a loan or credit facility and the amount investors can borrow depends on their financial situation and the collateral value.
The total amount investors can borrow depends on the securities in their portfolio, each security is assigned a risk rating that determines the number of times you can leverage. Out of 82 stocks in the Hang Seng Index, there are 74 stocks, more than 90% of the stocks you can leverage more than 3 times.
A video instruction on how to enable Margin Lending please click on this link.
For factsheet on Margin Lending, please click on Factsheet on Margin Lending.
2024: The wasted year
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As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
Markets are driven by election optimism, overshadowing growing debt and liquidity concerns. The 2024 elections loom large, but economic fundamentals and debt issues warrant cautious investment.
As US economic slowdown hints at a shift away from exceptionalism, USD faces downside with looming Fed cuts. AUD and NZD set to outperform as their rate cuts lag. JPY gains on carry unwind bets and BOJ pivot.
Amid AI and obesity drug excitement, equities see varied prospects: neutral on overvalued US stocks, negative on Japan due to JPY risks, positive on Europe. European defence stocks gain appeal.
With the economic slowdown, quality assets will gain favour, especially sovereign bonds up to 5 years. Central banks' potential rate cuts in Q2 suggest extending duration, despite policy and inflation concerns.
Commodities poised for rebound. The "Year of the Metal" boosts gold and silver, copper awaits rate cuts. Grains may recover, natural gas stabilises. Gold targets $2,300-$2,500/oz, copper's breakout could signal growth.
