On October 4th, the Hong Kong stock market transaction volume retreated to 261.5 billion Hong Kong dollars, closing up 2.82% at 22,742 points. During the three-day opening of the mainland's National Day holiday, the Hang Seng Index rose by more than 1,500 points and broke through the significant resistance level: the high point of 22,700 points in January 2023.

On October 7th, without the participation of mainland funds through the Hong Kong Stock Connect, the Hong Kong stock market will usher in the last trading day of the mainland's National Day holiday. The "Great Era of Hong Kong Stocks" has once again been initiated. Referring to the trends of several past "Great Eras of Hong Kong Stocks," how far can this Hong Kong stock market go?

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After nearly a month of consecutive significant increases in Hong Kong stocks, as the tug-of-war between bulls and bears becomes more intense, the market's volatility will increase. Investors will need to pay more attention to the fundamentals of listed companies and changes in transaction volumes.

In the past three "Great Eras of Hong Kong Stocks," the market was able to sustain for a period, with similarities including a rush to open investment accounts and a mentality of "buying without asking the price," along with expectations for mainland funds to take over.

In August 2007, with the "Hong Kong Stock Express," the Hang Seng Index rose from 19,386 points on August 17th to 31,958 points on October 30th, with transaction volumes approaching 210 billion Hong Kong dollars on October 3rd. In April 2015, when public funds were allowed to buy Hong Kong stocks through the Hong Kong Stock Connect, the Hang Seng Index rose from 24,486 points on March 27th to 28,588 points on April 27th, with transaction volumes reaching 263.6 billion Hong Kong dollars on April 13th.

The most recent occurrence was less than four years ago: at the beginning of 2021, public funds aggressively bought in, with the Hang Seng Index rising from 26,119 points on December 22, 2020, to 31,183 points on February 17, 2021, with transaction volumes breaking through 300 billion Hong Kong dollars on January 19, 2021.

"You might not even have time to eat a bowl of instant noodles in a bull market that hasn't even started trading yet," a mainland account manager told reporters from First Financial Daily, indicating that Hong Kong stocks have once again welcomed a surge in retail investor account openings similar to that in April 2015, with Hong Kong brokers also experiencing queues for account openings. Unlike the past, the mainland A-share account opening surge had already arrived in December 2014, six months before the Hong Kong stock surge; this time, the account opening surges for Hong Kong and A-shares are almost synchronized, with Hong Kong stock transaction volumes breaking through 500 billion Hong Kong dollars on September 30th, a significant increase from the 300 billion Hong Kong dollars in 2021.

The aforementioned three "Great Eras of Hong Kong Stocks" were based on these similarities: expectations for mainland funds to take over, investors "buying without asking the price," and ultimately ending when the strength of mainland funds taking over was less than expected. In the case of market overheating, mainland regulatory authorities also took measures at the time: for example, in 2007, the Hong Kong Stock Express was suspended, and in 2015, the leverage ratio in the stock market was gradually reduced.

Will mainland funds continue to take over and buy?The "Hong Kong stock market era" that began in late September 2024 was initially triggered by the Federal Reserve's unexpected interest rate cut of 50 basis points on September 19th. This was followed by a market rise that mirrored the situation at the end of September in the A-share market, both due to the unexpected monetary policies such as interest rate cuts and reserve requirement ratio reductions in mainland China. Subsequently, investors eagerly anticipated the introduction of fiscal policies.

On October 2nd, despite the absence of mainland funds, the Hong Kong stock market still saw transactions of 434 billion Hong Kong dollars and rose by 6.2%. The main buyers on that day were overseas funds. In terms of individual stocks, some stocks with poor fundamentals and low prices for three years experienced a doubling in a single day, and some "penny stocks" even increased several times in value within a day, with similar situations continuing on October 4th.

Some investors who bought Hong Kong stocks during the mainland's National Day holiday had the mentality of expecting mainland investors to take over after the Hong Kong Stock Connect resumed trading on October 8th. This was also one of the reasons for the irrational rise in some stocks.

In the three Hong Kong stock market trends of 2007, 2015, and 2021, a large number of investors bought some Hong Kong stocks for the reason of "cheapness" and fell into the trap of becoming "cheaper" and not knowing when it would be the "cheapest."

After the Hong Kong stock market rose sharply by nearly 6,000 points since mid-September, its valuation is not as cheap as before. Although it is not yet expensive, investors who want to continue participating in the Hong Kong stock market in the future should return to fundamental analysis and carefully select companies with strong fundamentals to ensure that investment returns can withstand the test of time over the long term. The upcoming release of the third-quarter reports will also gradually lead the trend of the Hong Kong stock market. As the stock index rises, some investors with significant floating profits may have more cashing out or portfolio adjustments, and after mainland funds re-enter the market on October 8th, the battle between bulls and bears will become more intense, and market fluctuations will increase.

Whether the Hong Kong stock market transactions can break through the 50 billion Hong Kong dollar mark again, or even reach higher levels, is also one of the key concerns for investors. In the past few "Hong Kong stock market eras," one of the key factors in the turning point was that the transaction amount did not continue to set new highs and did not match the Hang Seng Index that had been rising for several consecutive days.