Hong Kong Stocks and Risk Factors

At the moment Hong Kong’s market is undervalued, however, risk-sensitive investors may want to stay on the sidelines for now before dipping their toes once again. The Hong Kong market is still highly uncertain as China Evergrande Group’s problems continue to affect the market sentiment. But investors who are “relatively aggressive” can start building up their portfolios.

The Hang Seng index in Hong Kong was around 23% lower than its February high as of its Wednesday’s close. In the third quarter of the year alone, the index tumbled nearly 15% for the period. Unfortunately, the investment outlook in Hong Kong remains “highly uncertain” as the stock market, especially institutional investors, will need time to digest different factors such as China’s policy tightening on tech stocks.

Investors who are looking to buy “highly volatile” stocks should take into account one very important factor. U.S. Treasury yields continue to increase and are likely to weigh on the tech sector. As a reminder, the benchmark 10-year Treasury yield recently crossed 1.5% and largely stayed above the level since. Higher bond yields have the potential to hit tech stocks.

On Thursday, the Dow Jones Industrial Average gained 337.95 points or roughly 1% to 34,754.94 helped by gains in Nike, Visa, and Home Depot. The S&P 500 added 0.8% to 4,399.76. The Nasdaq Composite advanced nearly 1.1% to 14,654.02.

Stocks reached their highs of the season as Senate Majority Leader Chuck Schumer made an important announcement. He announced on the Senate floor news of the debt ceiling compromise, which will avoid an unprecedented default for now. Lawmakers reached a deal on a short-term debt ceiling increase, which Schumer hopes will be passed later on Thursday. The deal will prolong the debt ceiling through early December.

Stocks jumped on Thursday with technology shares and reopening plays trading higher. Nvidia gained 1.8%, AMD added 2.7% and Twitter rose nearly 4.4%.

In the meantime, stocks tied to the reopening also rose. Shares of Costco added about 0.8%. The company reported better-than-expected September sales. Better-than-expected results helped to boost its shares. General Motors gained roughly 4.7%.

On Thursday, the small-cap benchmark Russell 2000 added 1.5%.

Investors are waiting for Friday’s closely watched jobs report. It is no secret that the Federal Reserve is monitoring the labor market. The jobs report has the potential to influence its decisions.

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