This article is intended solely for the author's personal investment and research purposes. Any individual stocks or funds mentioned should not be considered as investment advice or recommendations. Trading based on this content is done at one's own risk.
Let's review the performance of major market indices and several tracked sector indices. In February, major A-share indices saw varying degrees of gains, while the Hong Kong Hang Seng Index underperformed. Year-to-date, the CSI 500 Index leads with a 16% increase. The Hang Seng Stock Connect High Dividend Index and the CSI Dividend Index also performed well, rising 10% and 6% respectively. Regarding risk-free rates, the yield on China's 10-year government bond remained stable around 1.8%, near historic lows, indicating a relatively loose monetary environment that provides strong support for equity assets. The yield on the US 10-year Treasury note fell slightly below 4%, showing a marginal downward trend.
Sector-wise, the coal sector surged 17.2% year-to-date, driven by export restrictions from Indonesia and other countries which stimulated coal price increases. The photovoltaic industry is rebounding based on a turnaround narrative, benefiting from reduced internal competition, even though fundamental industry conditions haven't substantially changed yet. Similarly, the property sector shows signs of stabilization and recovery after years of decline, with rising secondary housing transaction volumes in January and February, alongside intensified home-buying incentives and existing housing acquisition programs in multiple regions. The poorest performers in February were the Hang Seng Tech Index and the CSI Overseas China Internet Index, down 6.6% and 11.5% year-to-date, primarily due to less-than-expected Fed rate cuts, foreign capital selling offshore assets, and concerns over the AI narrative. However, the PE and PB percentiles for the China Internet sector remain in low valuation ranges. The baijiu and consumer sectors turned negative year-to-date after a period of significant gains. In terms of dividend yields, the CSI Coal Index offers a 5.6% yield, while the CSI Bank Index's yield rose to 4.6% due to its counter-trend decline.
The most globally significant news over the weekend was the re-ignition of conflict in the Middle East—the death of Iran's Supreme Leader Ayatollah Khamenei in an attack. Online commentary on this event is sharply divided: some express sympathy and regret, while others point to his firm governance style and harsh suppression of domestic opposition, viewing the outcome as deserved. Frankly, without deep expertise in Khamenei's tenure, Iran's domestic situation, or its complex history, making a precise judgment on his legacy is difficult, and it's possible his rule involved the issues critics highlight. Beyond debating an individual's merits, what is truly unconscionable and infuriating is the rogue behavior of acting unilaterally against sovereign nations. While espousing democracy, freedom, and rule of law, such actions disregard international rules and basic principles, reminiscent of schoolyard bullying. This situation underscores the precious fortune of living in a strong, protective homeland that safeguards its people and upholds sovereignty and principles. Peace is not the global default; our daily security exists because a powerful nation stands behind us.
The ongoing conflict between the US/Israel and Iran has sparked extensive discussion among brokerages and investors about its potential impact on Monday's A-share market. For such event-driven investment opportunities, a cautious approach is generally advisable, avoiding rash participation. Safe-haven assets like gold have already risen off-exchange, while strategic resources like crude oil and shipping rates are also increasing. Whether agricultural prices will follow remains uncertain. Overall, this appears driven more by short-term speculative capital than sustainable long-term trends.
The core investment principle remains staying within one's circle of competence. For instance, regarding personally held oil stocks intended for long-term positioning, if event-driven spikes occur, reducing some exposure might be appropriate; however, chasing highs for short-term gains would not be pursued. If, within one's competence, a fundamentally undervalued stock is identified that would tangibly benefit from the event, using a dip to establish a position could be reasonable.
Recent sustained declines in China concept stocks, represented by TENCENT, have seen its stock fall over 20% from highs. Late Friday declines in TENCENT and BABA-W stocks were primarily due to the effective rebalancing of the MSCI China Index, which added 37 and removed 16 constituents, resulting in a net addition of 21. The weights of TENCENT and BABA-W were diluted due to the expansion, with TENCENT's weight decreasing by 0.203%, potentially triggering an estimated $293 million in passive fund outflows, making it the stock with the largest weight reduction and outflow in this adjustment. Conversely, the quarterly review results for the Hang Seng Index, effective March 9, explicitly increased TENCENT's weight from 6.85% back to the 8% cap. In the Hang Seng Tech Index, TENCENT's weight was raised from 7.26% directly to the 8% cap, making it one of the core constituents with the most significant weight increase in this adjustment. Furthermore, with TENCENT's earnings report due on March 18, the company will likely resume share buybacks. If the stock price remains depressed, a substantial buyback program is possible.
A final risk reminder: This article is for personal investment and research purposes only. Stocks or funds mentioned are not recommendations. Trading based on this content carries significant risk.