《Hedging》Reviewing last week, mainland China was on a week-long National Day holiday, and with the absence of northbound funds, the average daily trading volume of Hong Kong stocks fell short of HK$100 billion. In addition, the Hang Seng Index once dropped to 23,737 points, and the weekly high-low range was only 617 points, reflecting that Hong Kong stocks still lack direction and remain in a range-bound pattern. Ultimately, the Hang Seng Index rose 239 points for the week, closing at 24,211 points.
Regarding external factors, the author previously mentioned in this column that the current US stock market is constrained by the "three highs"—high inflation, high interest rates, and high political uncertainty. As the US midterm elections on November 3 approach, the variable of political uncertainty is gradually intensifying. According to the latest multiple opinion polls, the Democratic Party leads the Republican Party by more than ten percentage points in congressional election support, making it highly likely they will regain control of the House of Representatives.
Currently, the market is mainly focusing on three election outcomes. First, if the ruling Republican Party successfully retains control of both the Senate and the House, policy continuity will be maintained, allowing the Trump administration to continue tax cuts and a relaxed regulatory environment, which would benefit the stock market. However, Trump's promise to distribute $5,000 to voters would further increase fiscal spending, pushing up long-term bond yields and suppressing high-valuation growth stocks.
On the other hand, if the Democratic Party regains control of the House, the Trump administration would become a lame-duck government, causing major legislative proposals from the Republicans to stall. Furthermore, the development of AI data centers might also slow down. In addition, the Democratic Party would strengthen financial regulation, directly suppressing AI stock valuations, which would be detrimental to related shares. However, without Trump's cash handouts, fiscal expansion could be avoided, increasing the likelihood of declining bond yields.
The third scenario is if the election results are disputed or delayed, which the market would most likely dread. This would amplify political uncertainty risks, causing severe market volatility and prompting capital to shift toward safe-haven assets.
Therefore, the impact of the midterm elections on US stocks is not simply good or bad, but rather a reassessment of US government policy paths, including AI development, US-Iran conflict, China policy, tariff trade, and market regulation. However, it is certain that around the time of the elections, global stock market volatility will intensify.
Looking ahead, the Hang Seng Index in the short term will still be affected by weak mainland economic data, high external bond yields, and political uncertainty, making it difficult to break out into a one-sided trend. Before the US midterm election results become clear, the market is expected to continue fluctuating within a range of 23,800 to 24,800 points.
《Sincerity Securities Investment Services Director, Siu Yau-wah》
*Articles published in Economic Information, whether signed or unsigned, represent the personal opinions of the authors and do not reflect the stance of Economic Information. Economic Information serves merely as a platform for free expression of views.
Regarding external factors, the author previously mentioned in this column that the current US stock market is constrained by the "three highs"—high inflation, high interest rates, and high political uncertainty. As the US midterm elections on November 3 approach, the variable of political uncertainty is gradually intensifying. According to the latest multiple opinion polls, the Democratic Party leads the Republican Party by more than ten percentage points in congressional election support, making it highly likely they will regain control of the House of Representatives.
Currently, the market is mainly focusing on three election outcomes. First, if the ruling Republican Party successfully retains control of both the Senate and the House, policy continuity will be maintained, allowing the Trump administration to continue tax cuts and a relaxed regulatory environment, which would benefit the stock market. However, Trump's promise to distribute $5,000 to voters would further increase fiscal spending, pushing up long-term bond yields and suppressing high-valuation growth stocks.
On the other hand, if the Democratic Party regains control of the House, the Trump administration would become a lame-duck government, causing major legislative proposals from the Republicans to stall. Furthermore, the development of AI data centers might also slow down. In addition, the Democratic Party would strengthen financial regulation, directly suppressing AI stock valuations, which would be detrimental to related shares. However, without Trump's cash handouts, fiscal expansion could be avoided, increasing the likelihood of declining bond yields.
The third scenario is if the election results are disputed or delayed, which the market would most likely dread. This would amplify political uncertainty risks, causing severe market volatility and prompting capital to shift toward safe-haven assets.
Therefore, the impact of the midterm elections on US stocks is not simply good or bad, but rather a reassessment of US government policy paths, including AI development, US-Iran conflict, China policy, tariff trade, and market regulation. However, it is certain that around the time of the elections, global stock market volatility will intensify.
Looking ahead, the Hang Seng Index in the short term will still be affected by weak mainland economic data, high external bond yields, and political uncertainty, making it difficult to break out into a one-sided trend. Before the US midterm election results become clear, the market is expected to continue fluctuating within a range of 23,800 to 24,800 points.
《Sincerity Securities Investment Services Director, Siu Yau-wah》
*Articles published in Economic Information, whether signed or unsigned, represent the personal opinions of the authors and do not reflect the stance of Economic Information. Economic Information serves merely as a platform for free expression of views.
