At the beginning of the new year, wish everyone a wealthy, healthy and prosperous year. Last month, I advised investors to "further reduce their holdings in US stocks". As a result, the Dow entered first high and then a low in January. Although the Dow once rose to 34,374.5, it fell sharply for several consecutive days after that, and it was lower than the level at the end of last year when I wrote it! The S&P 500 Index and the Nasdaq also showed signs of turning from rising to falling! Among them, Goldman Sachs (GS), the "king of investment banks," fell short of expectations in the fourth quarter of last year. In particular, its investment banking revenue plummeted by nearly 48%. During the month, it laid off as many as 3,200 employees at once, driving the market down. Science and technology companies that benefited from the epidemic before, such as Amazon (AMZN), Meta (META), etc., also continue to report layoffs. High-interest rates affect the pace of scientific research. If the Fed's high-interest rate policy continues, it will have a negative impact on future development.

Investment science is gradually regarded as an "art" academically, and theories such as behavioural finance have emerged. In Chinese society, many people attach great importance to the theories of Yin Yang, the Five Elements, Feng Shui and Numerology, and use them as investment guidelines. Several "coincidences" that have appeared in recent years may tell us that history is surprisingly similar, so the author takes this opportunity to mention a little bit, and I hope you pay more attention:

First of all, let’s look back at 2022. Russia launched a war against Ukraine in Renyin last year, and US-Russian relations fell to a freezing point. In 1962, the last Renyin year, the Cuban missile crisis between the US and the Soviet Union was the closest situation to starting a nuclear war. Coincidentally, the United States and the Soviet Union (Russia), the back garden, and the quasi-nuclear war are all important keywords in the Renyin years.

Looking at the above, I personally expect that the stock markets in China and Hong Kong will show a pattern of first high and then low this year. This year is a traditional odd-numbered year, and there is a higher chance of a first high and then a low. At the same time, the five elements are "lack of fire" this year, which is not good for the stock market (because “fire” create prosperity). The timing is suitable for a short-term investment, and the volatility will be greater in the second half of the year. The market rebounded in the fourth quarter of last year due to the excessive decline earlier, which is in line with the wave B rebound in the wave theory, so pay special attention to when the rebound will peak. In fact, the current position of the Hang Seng Index is only higher than the February 2021 high of 31183-14597, which is above 20,932, which is 38.2% of the golden ratio of the crash wave, so it is not too optimistic. For the Hang Seng Index to confirm the turnaround, it is best to stay above 25,000 points to be optimistic.

As for individual industries, we are more optimistic about industries with five elements belonging to “fire”, such as coal stocks and oil stocks. It is expected that there will still be opportunities for political and economic fluctuations this year, and commodity prices will remain high. Therefore, coal stocks and three barrels of oil are still more favourable. Innovative stocks such as online education, online medical care and shopping malls are also hot. This year is not particularly good, but the future will be even stronger. As for the relatively weak five elements of earth and gold, there are also better choices. After the sharp drop in the past year, the valuation of mainland real estate stocks is undeniably low, financing has gradually normalized, and costs have stabilized. Therefore, relatively large-scale, cash stocks can be considered, leading companies with better sales such as Longfor Property (0960), China Overseas (0688), China Resources Land (1109), Country Garden (2007), etc. The market has not seen any "big fortune" this year, and it is suitable for steady growth. The lack of gold in the five elements is not good for the financial economy and the virtual currency market, but economic fluctuations are beneficial to the price of real gold, so it may benefit gold mining stocks such as Zijin Mining (2899) and Jiangxi Copper (0358).

The long-term aspect should also be mentioned. From the perspective of the three “yuan” and nine games, 2023 is the year when the "eight games" end. From 2004 to 2023, the soil transport "Bei Shui" will bring the property market to upgrade, and there will be all transfers. In 2024, there will be more chances for the economy to change again. Therefore, it is best to choose "hot" industries as long-term investment sectors when entering the market, especially virtual networks, technology, semiconductors, new energy, and new medical industries. When it comes to stock picking, I personally like industries/companies that are truly innovative and revolutionary. For example, online healthcare - Ping An Good Doctor (1833) to cope with the increase in "distance" between people during the epidemic, or choose Hua Hong Semiconductor (1347), which is relatively leading in the semiconductor industry, and China Literature (0772), which has a relatively high market share in the IP market, etc. However, studying “yuan” is more appropriate to study Chinese history. The last Ninth “yuan” was about 1844-1863. China experienced opium smoke ignited with "fire" and developed into the Opium War, followed by the battle between the British and French Allied Forces, and the Taiping Rebellion. Equal treaties, it can be seen that it is not all smooth. Therefore, even if the country is strong now, the changes brought by the illusory fire cannot be ignored. What's more, “wood” can make “fire”, “wood” dominates the east, and the chances of "making fire" in the east will increase under the 9th Luck. Therefore, I personally suggest that those who are capable should "diversify" their investments on average to reduce the risk of corresponding changes.

Yancoal Australia (3668) recommended by the author last month performed well, broke through the high level within the month, and returned 13.1% from the end of last year to the time of writing, and the five elements of this stock are also a more favourable "fire" this year, so recommend continue to hold. As for this month, the author recommends AviChina (2357), whose interim net profit fell 4% to RMB 1.154 billion. However, the country will continue to increase investment in the military industry in the future. Russia’s geopolitics is still tense, and there is a chance to launch again in the spring. There should be no problem in continuing to develop the business. This season, it can look up to the position of 4.68 yuan, and if it falls to 3.5 yuan, it will stop the loss. In a conclusion, Hong Kong people should take advantage of the change of the “yuan” (the luck to get rid of the bad habits of the past, don't miss the glory of the past, and be self-reliant, so that to fly high again!

Kay Ho (CE No.: ANV293)

Acer King Capital Hong Kong Limited

Statement: The author is a licensee of the 1st, 4th, and 9th types of licenses of Securities and Futures Commission, SFC. Acer King securities Limited and Acer King Capital Hong Kong Limited are affiliated companies of Hantec Group and were invited to contribute articles in Hantec Group's monthly newsletter. The writing does not represent the position of Hantec Group. As the author does not personally hold the above-mentioned shares, investors should exercise caution when buying or selling relevant securities and investment instruments.