Interesting data from the Hong Kong stock market in 2023: The Hang Seng Index fell 13.82% for the whole year, marking four consecutive years of decline, but the market has become absurdly polarized.

In terms of the increase, 103 stocks rose more than 100%, with the most extreme being the Emperor Group rising 16.37 times and Manuan rising 16.21 times, but they are all small-cap stocks with little influence. The real highlights are the constituent stocks of the Hang Seng Index, with Ideal Automotive rising over 90% (37.6 million units delivered in 2023, a staggering year-on-year increase of 182%), Lenovo rising over 80% (AI PC concept driving it up), and Xiaomi rising 42.6% (Q3 revenue showing the first quarter-on-quarter increase).

The decline here is severe: 465 companies fell over 50%, 154 companies fell over 70%, and Li Ning faced the worst drop among large-cap stocks, falling 68.74%. The real estate sector is in shambles, with Meituan dropping 53% and JD.com dropping 48%, and consumer recovery has not materialized.

What is the reason? Liquidity has dried up. In 2023, the trading volume of the Hang Seng Index was only 80% of that in 2022, with the new stock break issue rate exceeding 30%, and US Treasury yields hitting new highs, sucking capital away.

But there is a turning point: the Federal Reserve's interest rate cut expectations have come early, the RMB exchange rate is relatively strong, and institutions are saying that there is an opportunity for the valuation of Hong Kong stocks to recover. After all, it has fallen for more than three years, it should rebound. Will 2024 be a market for recovery?