(Yicai Global) March 16 -- The Hong Kong stock market is exploring the bottom in the wake of the Credit Suisse crisis and the failure of Silicon Valley Bank. The market will go on probing the bottom in the short term as it digests bad news from the overseas banking industry, but opportunities for investment will gradually reappear, according to analysts.
Financial stocks led the decline in Hong Kong this morning as investors worried about losses from asset impairments. The Hang Seng Index fell to as low as 19,109 at one point and closed down 1.7 percent at 19,203.91, with a turnover of HKD111.4 billion (USD14.19 billion). Since the end of January, the benchmark has fallen by 3,600 points.
The Hang Seng Index still has room to fall and stock price volatility will increase, said Yip Sheung Chi, an analyst at First Shanghai Securities. But at the same time, short-term volatility can be capitalized upon to find relatively good points to step in and buy premium good-performing stocks at lower prices, he added.
Ye pointed out that if the Hang Seng Index is used as a reference, investors should pay more attention if it falls further below 18,700 in the short term.
Hu Yu, chief economist of Xinding Fund Management, said Hong Kong stocks are greatly affected by the European and American markets. Once the United States reverses its monetary policy direction and stops raising interest rates, emerging markets, including Hong Kong, will be the biggest beneficiaries, he told Yical Global.
The US Federal Reserve is very unlikely to stop hiking rates immediately, according to BOCOM International Holdings. Instead, it may maintain a slow increase of 25 basis points each time.
But if inflation and employment do not continue to exceed expectations, or the crisis in the banking system spreads and escalates further, the Fed is likely to multiply its structural tools, maintain stable interbank liquidity, and may pause rate increases or even carry out phased cuts.
The Hong Kong stock market may continue to test the bottom in the coming week, said Francis Sze-Chi Kwok, an independent stock commentator. But even if the Hang Seng Index falls below 19,000, it is not a big problem, he noted.
That is because the current banking crisis in Europe and the United States is not like the 2008 financial meltdown, and we need to wait for market confidence to gradually recover, Kwok said.
Editors: Shi Yi, Peter Thomas