5/2 Daily Plan: Hang Seng eclipses the S&P 500. Can this gap continue?
Rally to Continue
Note: Investors can trade Hang Seng (HSI) or Micro Hang Seng (MHI) on Interactive Brokers. That is where I do it.
Hey Everyone!
What a tremendous week for China! Folks may have been wondering why I haven’t been really talking much about macro news earlier this week and instead decided to publish 2 DCF Conclusion Studies - one on Pinduoduo and the other on Alibaba.
Is this a coincidence that I decided to do DCF conclusion studies on China names in a busy week of U.S. macro news? Well, I just wasn’t really as interested in the U.S. setup this week with all these data points that we have to deal with.
What was clearer to me (at least for this week) was that the setup in China was quite appealing based on my recent read of stimulus updates.
Today, Pinduoduo soared 7% and BABA soared 4% after Hong Kong markets came back from a holiday session break.
Both my DCF conclusion studies indicated that these names have substantial trading upside once fund flows come back in.
And to top it off, Hang Seng (HSI) cleared 18000+ to trade at near 7% YTD and has now eclipsed the S&P 500.
If folks are interested in China and my thoughts on it, I will continue to share my research as long as there is strong support for it. Joining my Community supports us as one of the few China investment research providers that are still operating in the marketplace (most China strategists have been flushed out by the Bear Market in 2022-2024).
In terms of whether I think the Hang Seng rally can continue, I will openly put it out there that I believe it is very plausible for HSI to touch a 15-20%+ return profile in 2024. Will there be pullbacks on the way? Of course. Will there be huge selloffs that invite bearish narratives? Of course.
I intend to help folks find such opportunities and I believe members will be rewarded with their patience.
To help the public, I produced a Youtube video one month ago in late March hinting that I liked the sector again.
I’m now very busy finding opportunities for my members.
I hope you enjoyed PDD and BABA this week. I will find more.
Thank you for your support as always,
Larry
China DCFs:
Resources related to the Hang Seng:
On Interactive Brokers (Link): IBKR is where U.S. and European investors can trade Hang Seng HSI and MHI directly. For most investors interested in Hang Seng exposure, I would HIGHLY recommend MHI (Micro HSI) before ever touching HSI. They are highly leveraged products. I trade MHI on top of ES/NQ; it is important to note the pace of Hang Seng Index is typically 1.5X faster than NQ (Nasdaq-100).
Please use simulator accounts before ever putting real capital to work. The Hang Seng routinely makes 100-300 point moves making these products have large swings that can work favorably or unfavorably at a very fast pace.