Hang Seng Company: Hong Kong stock trading volume slows down, but trading activity remains robust.
On September 5th, Hang Seng Index Company pointed out that in the first eight months of 2023, the average daily turnover of the Hong Kong stock market was HKD 1.12 trillion, a YoY decrease of 12%, currently below the long-term upward trend.
According to Dolphin Research, the daily average turnover of the Hong Kong stock market in the first eight months of 2023 was HKD 1.12 trillion, a 12% year-on-year decrease, currently below the long-term upward trend. It is worth noting that the decline in daily average turnover does not mean that the Hong Kong stock market has lost its vitality. In August, the turnover rate of Hong Kong stocks (turnover/market value) was 85% (or the 12-month moving average was 83%), which is similar to the long-term average, indicating that market trading remains active.
Using similar calculations, the turnover rate of the Hang Seng Technology Index (turnover of index constituents/market value of constituents) has been 91% since its launch, higher than the market's turnover rate. The Hang Seng Technology Index is actively traded and can provide investment strategies for the top 30 technology stocks listed in Hong Kong.
Since January 2021, the 12-month moving average line ("12mma") of the turnover rate of the Hong Kong stock market has been regressing to the mean, ranging from 79% to 87%, with an average of 83%, which is roughly similar to the long-term average of 82%. Given the relatively stable trend of the turnover rate, the decrease in daily average turnover or turnover (stock price x quantity) reflects the decline in the market value (i.e., "stock price") of the Hong Kong stock market, while the trading volume ("quantity") remains relatively stable. Therefore, although the stock market has declined (Figure 2, gray line), the level of trading activity can still be maintained.
The Hang Seng Index Company uses a similar method to calculate flagship indices. The average turnover rate of the Hang Seng Technology Index since its launch in August 2020 is 91%, higher than the market's average turnover rate of 82%, while the average turnover rate of the Hang Seng Index ("HSI") during the same period is 67% and the average turnover rate of the Hang Seng China Enterprises Index ("HSCEI") is 77%.
