Dim Sum Time?
Hong Kong is showing more signs of bottoming and ATEC is getting excited.
While we still lack formal confirmation for a turn in the HSCEI, we have seen our technical indicators flattening out suggesting selling exhaustion. We are also heartened that the Hang Seng Financials index held its September lows and we think this adds to the evidence that the Evergrande/ real estate damage has already peaked.
From a macro standpoint, and unlike many of the G7 countries, it is also true that China has much more leeway to stimulate its economy, whether targeted or not. Even its recent move towards common prosperity can be seen as an attempt to redistribute consumption away from the few to the many.
Having burst many of its own bubbles - such as shadow banking, wealth management products, local government debt etc. - over the last few years, it is also not hard to see why China’s slate will appear a lot healthier compared to many as we edge closer to 2022.
Should this scenario be correct, ATEC thinks there will many other sectors which will be just as or more attractive than just HSTECH.
Let us see the confirmation. Good luck out there.