Home by the river: Hang Seng Index is waiting for the US stock market to provide guidance in the short term.

On Monday, the Hang Seng Index in Hong Kong was still waiting for the follow-up judgment of the sovereign rating downgrade by the US stock market in the evening. It is unknown how Moody's change of the US credit rating to negative will affect the US stock market, but the news media will amplify the risks of the US stock market.

It is worth mentioning that if the US Congress fails to reach an agreement on fiscal appropriations, the existing short-term fiscal measures will expire on November 17th (next Friday), which is colloquially referred to as the potential "shutdown time" for the US government.

Market investors have become accustomed to this kind of shutdown in the US, where it always comes down to the wire, with proposals being passed and perhaps the government shutting down for a few days, only to pass the budget a few days later. The capital market is most concerned about the attitude of the Federal Reserve towards the interest rate hike cycle. Hong Kong's major financial institutions generally believe that the Federal Reserve's interest rate hike cycle has basically ended, and the focus is on market expectations for the timing and magnitude of interest rate cuts, as well as the interventions and statements made by central banks in response to this.

So, the A-share market continues to increase its speculative expectations for the technology sector. In particular, the Huawei system is a solid fundamental reversal, suitable for long-term funds to anticipate the valuation increase in the coming years. In the Hong Kong market, there are not many listed companies associated with the Huawei system, which makes it appear hesitant.

The innovative pharmaceutical sector in the Hong Kong stock market can actually be compared to the popularity of the Huawei system in the A-share market. I believe that even if the Hang Seng Index adjusts, the biopharmaceutical sector in the Hong Kong stock market will still demonstrate excellent resilience against market downturns.

CStone Pharmaceuticals (02268) is currently applying for a new listing in Hong Kong. According to Frost Sullivan's data, based on the 2022 earnings, the company is the world's second-largest CRDMO for ADC and other bioconjugate drugs. The company is jointly sponsored by Morgan Stanley, Goldman Sachs, and J.P. Morgan for stabilization, and there is no doubt about Morgan Stanley's ability to stabilize prices. The data is there, except for Beisen Holdings, most of the other major players have basically stabilized. There are estimated to be many new investors, and the subsequent verification will determine the level of return on investment.

Douyin e-commerce released a data report on the "Douyin Mall Double 11 Festival". The report shows that during the Double 11 period, the cumulative live broadcast time in Douyin e-commerce reached 58.27 million hours, and short videos with items added to the shopping cart were played 169.7 billion times. Douyin Mall's GMV increased by 119% compared to the same period last year.

At the same time, the Hong Kong stock market giant, Biostime (02367), released its Double 11 report on its WeChat official account (specific data can be checked). It can focus on people with dry and sensitive skin/oily and sensitive skin, and its ability to create single products continues to strengthen, while the category and product matrix are gradually improving. The company is researching four skin rejuvenation products, and the current progress is fastest for reconstituted collagen liquid formulations/solid formulations, which are expected to be certified next year (Class III). Gel (for moderate to severe neck lines) + cross-linked gel (for moderate to severe nasolabial folds) is expected to be certified and listed in 2025.

On November 8th, the Financial Secretary of the Hong Kong Special Administrative Region Government, Paul Chan Mo-po, stated that with the support of the central government, Hong Kong is actively promoting cross-border data flow in the Guangdong-Hong Kong-Macao Greater Bay Area. Data integration will be beneficial to the development of industries such as artificial intelligence and biopharmaceuticals. In particular, many foreign pharmaceutical industry leaders are interested in setting up research and development departments in Hong Kong.If Hong Kong seizes this opportunity, I believe that the innovative pharmaceutical sector in the Hong Kong stock market will be even more attractive to investors, especially in terms of liquidity.

Disclaimer: This article is for discussion purposes only and should not be considered as investment advice. The author does not hold any Hong Kong stocks mentioned above. Investing in the stock market carries risks, so please exercise caution!