Why My Strategy Failed on the Hong Kong Stock Market
To understand the unique challenges of investing in Hong Kong, you have to look at its history. Since the British handover to Chinese sovereignty in 1997, the region has operated under the “One Country, Two Systems” principle. This framework gives Hong Kong a high degree of autonomy in its economic and administrative affairs for 50 years, setting it apart from mainland China even though it isn’t an independent state. For anyone interested in , this unique political and economic landscape is a critical factor.
Hong Kong's economic story is remarkable. Beginning in the 1980s, it transformed from a relatively poor province into a global financial titan. Key drivers like its strategic location, low taxes, and robust infrastructure fueled this incredible growth. As a result, its main index, the Hang Seng, became an important bellwether for international markets, despite the region’s GDP ranking 40th globally.
However, the charts don't lie. After hitting an all-time high in 2018, the Hang Seng began to stray from the path of other global indices. A mix of political unrest, the pandemic's fallout, and the complex ripple effects of Brexit—given Hong Kong's deep historical ties to Britain—created a difficult economic environment. Today, the index is hovering around 43% below that historic peak. For anyone here, the last few years have been tough.
Putting the Strategy to the Test
When I applied my investment strategy to the Hang Seng, it turned out to be the toughest test of all. Across every metric I track, it landed at the bottom of the list. That said, the strategy managed to pull off a total return of 26.1%, so at least no initial capital was lost. This is a crucial lesson in ; sometimes, not losing money is a small win in a difficult market.
What really stood out was the Hang Seng’s performance during the pandemic. It was the only index I analyzed that flashed multiple negative performance signals, posting an average decline of about -14% during that period.
The Final Verdict and What's Next
Ultimately, my strategy just wasn't a good fit for the Hang Seng. While it avoided losses, it failed to produce any meaningful gains, which means I can't consider it a prospective index for this approach. The charts reinforce this conclusion, showing the index in a steep downward trend. Adding to the concern, the RSI indicator hit a historic low of 21.8 in 2022—not exactly a bullish sign. This experience is a valuable takeaway for : a strategy that works in one market can easily fall flat in another.
There may be other factors contributing to this decline that will only become clear over time. But for now, time will be the ultimate judge.
With this analysis of the Hang Seng wrapped up, the focus now shifts from stock indices to a completely different asset class: commodities. Although commodities are often seen as specialized and subject to seasonal swings, they have performed surprisingly well within my evaluation framework. My strategy is built around buying at the absolute lows, and since every commodity experiences bear markets, there are always opportunities to find entry points and . This is a different way to generate , moving beyond traditional stock markets. First up on that list is the timeless precious metal: Gold.
