On July 5th, after four days of slow rise, the Hong Kong stock market once again saw a trend of shrinking volume. The Hang Seng Index fell more than 220 points, closing at the level of 17800 points. Recently, the high-end varieties that had been on the rise showed signs of retracement, but other heavyweight stocks failed to follow suit, which is believed to be the reason for the return pressure on the overall market. The continuous low trading volume, recorded at just over 90 billion yuan for the second consecutive day, is also a major technical factor in judging the trend of the Hong Kong stock market. Looking at the situation in the first half of the year, the daily turnover of the overall market rose from 99.3 billion yuan in the first quarter to 121.5 billion yuan in the second quarter, as liquidity increased and the undervaluation of the Hong Kong stock market can be restored. The main trading range of the Hang Seng Index also rose from 15300 points to 17200 points in the first quarter, to 17200 points to 19000 points in the second quarter. As for the current situation, due to the uncertainty of the overall factors, the market is still observing the impact of factors such as when the Federal Reserve will reduce interest rates and the progress of the mainland's economic restructuring. The cautious atmosphere has also become stronger as a result. Under the conditions of gradually leaning towards observation, the liquidity of the Hong Kong stock market has shown a clear shrinkage in recent days, and trading volume has fallen back below 100 billion yuan, returning to the level of the first quarter. Therefore, attention must be paid to the overall slowdown of the Hong Kong stock market and the opportunity for the Hang Seng Index to gradually decline. The upper limit of the main trading range in the first quarter at 17200 points is currently the main technical support level.

The Hong Kong stock market opened flat and fell throughout the day, closing at 17800 points, still continuing the running pattern of one wave lower than the other since mid-May, and the previous micro-wave peak of 18520 points is still the main rebound resistance. Index stocks showed a general decline, with Macau's June gambling revenue falling 12% month-on-month, performing lower than the market expectations, and Galaxy Entertainment (00027) falling 3.29%, the largest constituent stock of the Hang Seng Index. On the other hand, the Chinese mainland banking stocks that are about to go ex-dividend are also facing technical selling pressure, with ICBC (01398) and Bank of China (03988) falling by more than 2%, and Industrial and Commercial Bank of China (00939), which was the first to go ex-dividend on Thursday, falling by 3.24%.

The Hang Seng Index closed at 17800 points, down 229 points or 1.26%. The NASDAQ Composite Index closed at 6,382 points, down 89 points or 1.36%. The Hang Seng Technology Index closed at 3,597 points, down 53 points or 1.44%. In addition, the turnover of the Hong Kong main board was over 90.3 billion yuan, while the short-selling amount was 14.11 billion yuan, and the short-selling ratio was 15.63%. As for the ratio of rising and falling stocks, it was 599:975, with 35 stocks rising more than 10% and 48 stocks falling more than 10% during the day. The Hong Kong stock market continued to see a net inflow for the eighth consecutive day, recording a net inflow of nearly 0.4 billion yuan on Friday.

Author: Chief Strategist of First Shanghai, Ye Shangzhi.