![](https://i.imgur.com/CLvY2jA.png")
22-09-2022, 08:13 PM
Everyone is getting out of the sinking ship....
The HK market has the same price to book and price to cashflow as during financial crisis. This means investors are pricing the market for a severe economic collapse. HK is now in recession already.
The long term RSI is below that of Financial Crisis and same as in bottom of Asian crisis.
When this happens should you buy or sell? 99% of the people will panic and be fearful sellers.
You may think it's time to buy as a contrarian as everyone is in fear. There is one problem..that makes it not so straight forward.
While the market is certainly cheap, there is one tricky issue. The HKD is peg to USD. Everytime the FED raise rates HK needs to follow. In each of the past criisis, HK stocks bottomed only when Fed cut rates. Asian crisis ended when Fed cut rates 3 times. Fiancial crisis the HSI bottomed when Fed cut rates sharply.
The problem now is HK and US is off sync ...HK is in a bad recession while US is fighting inflation and will hike rates in the coming months. This complicates the bottom picking. But I dare say savvy value investors have to be considering to buy this historic low valuation regardless of the interest rate situation.
![[Image: MTDvXlE.png]](https://i.imgur.com/MTDvXlE.png)
The HK market has the same price to book and price to cashflow as during financial crisis. This means investors are pricing the market for a severe economic collapse. HK is now in recession already.
The long term RSI is below that of Financial Crisis and same as in bottom of Asian crisis.
When this happens should you buy or sell? 99% of the people will panic and be fearful sellers.
You may think it's time to buy as a contrarian as everyone is in fear. There is one problem..that makes it not so straight forward.
While the market is certainly cheap, there is one tricky issue. The HKD is peg to USD. Everytime the FED raise rates HK needs to follow. In each of the past criisis, HK stocks bottomed only when Fed cut rates. Asian crisis ended when Fed cut rates 3 times. Fiancial crisis the HSI bottomed when Fed cut rates sharply.
The problem now is HK and US is off sync ...HK is in a bad recession while US is fighting inflation and will hike rates in the coming months. This complicates the bottom picking. But I dare say savvy value investors have to be considering to buy this historic low valuation regardless of the interest rate situation.
I, being poor, have only my dreams; I have spread my dreams under your feet; Tread softly because you tread on my dreams.
