Editor's note: The eight-day National Day holiday in mainland China is still ongoing, and I would like to wish everyone a happy National Day and Mid-Autumn Festival. During this Golden Week, the mainland A-shares have a brief market closure, while significant news continues to emerge from external markets. Among these, the Hong Kong stock market has once again risen to a four-year high. What does this indicate? Additionally, during the Golden Week, Hong Kong has seen a resurgence of tourists on the streets. Is this a sign of prosperity in both people and finances?
【Anchor】Hello everyone, welcome to DDN Business Insider. I am Yunfei Zhang. The eight-day National Day holiday in mainland China is still ongoing, and I would like to wish everyone a happy National Day and Mid-Autumn Festival. During this Golden Week, the mainland A-shares have a brief market closure, while significant news continues to emerge from external markets. Among these, the Hong Kong stock market has once again risen to a four-year high. What does this indicate? Additionally, during the Golden Week, Hong Kong has seen a resurgence of tourists on the streets. Is this a sign of prosperity in both people and finances? To discuss these topics, we have invited Yang Delong, Chief Economist of First Seafront Fund, and Timothy Chui, Executive Director of the Hong Kong Tourism Association (HKTA), to provide their insights.
First, let's focus on the continuously rising Hong Kong stock market. During the National Day holiday, the inflow of southbound capital was suspended, and many analysts had predicted a short-term correction in the Hong Kong stock market. However, the actual trend has been the opposite. The Hang Seng Index broke through the 27,000-point mark during the Golden Week and reached a nearly four-year high. Mr. Yang, what does this unexpected strength indicate?
【Yang】From a capital perspective, the Hong Kong stock market has been driven by increased foreign investment inflows. During the National Day holiday, while the southbound capital was paused, the Hong Kong stock market remained strong, indicating that a lot of foreign capital is accelerating its allocation into Hong Kong stocks. Both undervalued assets and technology internet stocks have become key focus areas for capital allocation. The strength of the Hong Kong stock market provides a solid foundation for the recovery of the A-share market after the holiday. The interaction between A-shares and Hong Kong stocks is continuously strengthening. With the Hong Kong stock index hitting a four-year high, the cyclical bull market trend between A-shares and Hong Kong stocks is further solidified, which undoubtedly serves as important support for the A-share market to continue its upward trajectory.
【Anchor】Mr. Yang, what kind of market trend do you anticipate after the holiday?
【Yang】This round of bull market for A-shares and Hong Kong stocks is expected to last for another two to three years; we are still in the first half of the bull market. The market conditions for A-shares and Hong Kong stocks during this golden September and October are becoming increasingly favorable. After the holiday, both A-shares and Hong Kong stocks are expected to maintain a strong upward trend, and the profit-making potential in the market remains high. I advise investors to maintain confidence and patience and to seize the opportunity for significant recovery in the valuation of Chinese assets to achieve wealth growth. The surge in the Hang Seng Tech Index is expected to drive the continued strength of the hard-tech sector in A-shares post-holiday, including humanoid robots, solid-state batteries, computation power and algorithms, semiconductor chips, and innovative pharmaceuticals, which may continue to show strong performance.
【Anchor】Another topic that has drawn attention during the National Day holiday is the official shutdown of the U.S. government on October 1, marking the first government shutdown in seven years. However, on the first day of the shutdown, both the Dow Jones and the S&P 500 reached historical highs, with the S&P 500 even surpassing the 6,700-point mark. Mr. Yang, what do you believe are the core driving factors behind this seemingly contradictory trend?
【Yang】Regarding the U.S. stock market, the shutdown occurred because the Republican and Democratic parties could not reach an agreement on the fiscal spending plan. Despite this, the U.S. stock market remains strong and has not been affected. This is mainly because the impact of a government shutdown on the economy is not significant. President Trump intends to use this opportunity to reduce government staff and cut fiscal spending. This shutdown may not last long. The last government shutdown occurred during Trump's term and lasted longer, having a more noticeable impact on the economy.
【Anchor】Currently, the government shutdown has already affected the release of economic data, with the U.S. Bureau of Labor Statistics confirming that several key reports, including the September non-farm payroll report, will be delayed. In this situation, where official data support is lacking due to the shutdown, is the recent rise of the U.S. stock market unstable? Does this signify that risks are accumulating significantly in the market?
【Yang】The U.S. government shutdown may increase the risk of a pullback in the stock market. Some investors are already starting to pay attention to the risks associated with high valuations in the U.S. stock market. Warren Buffett, the "Oracle of Omaha," has significantly reduced his U.S. stock holdings since last year to avoid the risk of a potential market decline from high levels. The main reason for the government shutdown is the lack of consensus between the two parties on the debt ceiling and significant disagreements on fiscal spending plans. The U.S. government has a debt of up to $37 trillion, and the time it takes to accumulate each additional trillion is decreasing, indicating that government spending far exceeds fiscal revenue. This has led to a towering debt, with interest payments on national debt alone amounting to $1 trillion per year. This situation raises questions about the U.S. Dollar's creditworthiness. The increasing dollar supply and rising government debt undermine global confidence in the currency.
【Anchor】Now, let's turn our discussion to holiday consumption. Recent news indicates that the number of mainland visitors to Hong Kong is expected to reach 1.54 million, surpassing the figures from this year's Lunar New Year and the May Day Golden Week. Additionally, surveys show that Hong Kong has become the top travel choice for high-net-worth individuals from mainland China during the Golden Week. What are your thoughts on this phenomenon?
【Chui】In the Greater China region, particularly in mainland China, if customers are really looking to buy high-end products, such as watches or handbags, Hong Kong indeed does offer a lot of options. In terms of styles and sometimes limited editions, the choices in Hong Kong are definitely more varied than in mainland China. Sometimes, especially for high-spending individuals who may be busy with work, it is quite normal to take advantage of holidays to travel and shop. If they choose Hong Kong as their destination, their main goal is essentially to shop, so they often come prepared to buy things like cosmetics, skincare products, or limited-edition handbags. This is a common occurrence. Therefore, during long holidays, it is completely understandable that there are long queues at famous stores on Canton Road and in Central.
【Anchor】Based on the data available and your understanding of the situation, what trends are emerging in tourism and consumption during the Golden Week? Compared to previous Golden Weeks, what new characteristics do you believe this current Golden Week presents?
【Chui】During the Golden Week holiday, customers have more time and budget for travel, naturally leading them to seek longer trips, possibly to cross-regional or cross-provincial destinations. Many visitors from Central and Northern China are choosing to travel to the Greater Bay Area or Hong Kong. Shopping in Hong Kong is well-known; the local economy certainly relies on residents and visitors coming to Hong Kong to shop and experience our service industry. This is one of our strengths. In particular, for high-value products, such as luxury goods, women may buy gold for its value retention or as gifts for family members during significant occasions. Additionally, many customers purchase skincare products or handbags, which indicates a strong demand for Hong Kong's various brands, local products, jewelry, and health and beauty items. There is a lot of confidence in these areas.
【Anchor】In light of these new consumer characteristics, do the tourism, retail, and related industries need to make adjustments in their development direction and tourism product design?
【Chui】For instance, clothing retailers could offer more guidance on how to style outfits effectively. I believe any fashion store or major brand can do this. There could also be more personalized services to enhance customer experiences. In dining, we welcome mainland visitors; for example, could there be live performances of traditional Chinese opera, or workshops in restaurants where customers can make their own shrimp dumplings or siu mai? This would allow customers to have a deeper experience of our local culture. Nowadays, tourists are seeking immersive experiences, which I would describe as consumption that has context and visual appeal. I think related industries could do more in this area.
【Anchor】There have been viewpoints suggesting that the willingness to spend among visitors to Hong Kong has decreased in recent years. Mr. Chui, do you think the current situation of lower consumer willingness among travelers has improved?
【Chui】I believe that travelers are not unwilling to spend. We see that visitors buy many souvenirs at events like concerts. In the two theme parks, they also purchase a lot of memorabilia. Even for unique products, especially food items, customers are willing to spend. We observe that many high-spending customers continue to shop, but we also hear from some merchants that business has declined. I think our related industries, including retail and dining, need to adapt. For example, we should enhance service levels and improve food quality. Furthermore, we need to find ways to encourage travelers to open their wallets for spending; this is where success lies. Travelers are looking for experiences.
【Anchor】What are your expectations for the overall number of tourists and consumer spending during this Golden Week?
【Chui】Overall, the number of visitors aligns with our expectations. Whether there are a few thousand more or fewer travelers is influenced by many factors. However, what I'm most concerned about is how visitors perceive Hong Kong during the long holiday—whether they have a good experience, whether they can enjoy themselves, and most importantly, whether they can share their joyful experiences in Hong Kong with friends and post them on social media. This will encourage more friends from mainland China to choose Hong Kong as their travel destination, whether for long holidays or short trips. The ultimate goal is to make Hong Kong an irresistible travel destination. While visitor numbers and spending are important, they are secondary to ensuring a positive experience that encourages repeat visits and recommendations.
【Anchor】OK, thank you. That's all for this episode. Remember to follow us on YouTube or download our APP. I'm Yunfei Zhang, thanks for watching, and see you next time.
Anchor: Laura Cheung | Edited: Kelly Yang, Laura Cheung, Rachel Liu | Translate: Kato Ip | Proofread: Chris Liu
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