GF Securities: Will this round of Hong Kong stock market spring frenzy be absent?

GF SEC released a research report stating that the newly appointed Fed chairman's interest rate cut path is hawkish, so there is no need to worry. Previously, the most likely candidate for chairman, Hassett, saw his election probability plummet from 78% to 54% after making hawkish statements on interest rate cuts, indicating that the market expects the next Fed chairman to be dovish. In Trump's eyes, "compliance" is more important than "professionalism." Therefore, regardless of who becomes the next Fed chairman, the likelihood of an extremely hawkish interest rate cut stance is small. The Hong Kong stock market's spring frenzy this year will not be absent. This may be due to loose liquidity/unexpected increase in funds, leading to a strong spring frenzy year. In early next year, attention can be focused on DeepSeek's model progress and the progress of domestic internet giants' consumer applications, which may have a positive impact on the Hang Seng Technology Index's fundamentals. GF SEC main points are as follows: There is a clear time difference between the spring frenzy of Hong Kong stocks (before Christmas to before Chinese New Year) and the spring frenzy of A-shares (after Chinese New Year to the Two Sessions). Over the past fifteen years, the probabilities of the Hang Seng Technology Index and the Hang Seng Index rising during the spring frenzy were 72.7% and 80.0% respectively, with median increases of 6.3% and 4.7%, and mean increases of 4.7% and 3.8% respectively. The appearance of the Christmas rally does not have a particularly rational explanation. However, due to the high success rate of the Christmas rally and its widespread publicity, the S&P 500 has had an 81% chance of rising in the past 97 years, and the Hang Seng Index has had a 77% chance of rising in the past 59 years. The long-term seasonal patterns may reinforce investor expectations, forming a momentum effect of "self-fulfilling prophecy" under the support of quantitative funds. An enhanced way of income: the spring frenzy of Hong Kong stocks. Although the Hang Seng Index is still some distance away from its previous high, the high success rate of the spring frenzy of Hong Kong stocks has been so high that constructing a strategy focused on investing in the Hang Seng Index during the spring frenzy from any past time point has been profitable. When does the Hong Kong stock market's spring frenzy fail/move back? Only in 2014 did the absence of the spring frenzy occur due to overseas liquidity shocks; in 2016 and 2024, it was mainly due to risks events, with the former being the expiration of circuit breakers & selling restrictions, and the latter being a snowball entry burst & DMA liquidation, leading to the spring frenzy moving back to after Chinese New Year. When is the Hong Kong stock market's spring frenzy stronger? Firstly, with loose liquidity/unexpected increase in funds, such as in 2021 and 2023. Secondly, unexpectedly strong short-term macroeconomic data/listed company profits, such as in 2017 and 2019. Will this round of the Hong Kong stock market's spring frenzy fail? Current concerns about liquidity: (1) Closure of Japanese carry trades: No need to worry too much. The market is fully expecting Japanese rate hikes and Fed rate cuts, so the stockpile positions for carry trades have significantly contracted, making the impact of liquidity shocks likely weak. (2) Stock unlocking in the Hong Kong stock market: The peak is over, and unlocking pressure is small. The peak of unlocking at the end of the year has passed, with a total of 126 billion Hong Kong dollars of restricted shares being unlocked in December, falling to around 500 billion Hong Kong dollars in January. (3) The newly appointed Fed chairman's interest rate cut path is hawkish: No need to worry. Previously, the most likely candidate for chairman, Hassett, saw his election probability drop from 78% to 54% after making hawkish statements on interest rate cuts. This indicates that the market expects the next Fed chairman to be dovish. In Trump's eyes, "compliance" is more important than "professionalism." Therefore, regardless of who becomes the next Fed chairman, the likelihood of an extremely hawkish interest rate cut stance is small. The Hong Kong stock market's spring frenzy this year will not be absent, possibly due to loose liquidity/unexpected increase in funds, leading to a strong spring frenzy year. In the early next year, it is worth expecting and focusing on DeepSeek's model progress and the progress of domestic internet giants' consumer applications, which may have a positive impact on the fundamentals of the Hang Seng Technology Index. Risk warning: Geopolitical risks, overseas inflation risks, domestic stabilizing growth policy with low expectations, etc.