China Market US Market

Huge Relief Rally – Is It Time To Buy Tech Stocks?

Calvin Lo

Wow, what a massive relief rally the past week in both US and HK markets! Nasdaq 100 and HSI are up almost 9% and 6% respectively for the week. HSTECH representing Chinese Tech jumped even more.

A few reasons for the rally which started mid week:

  • Chinese government signalling light at the end of the tunnel for regulatory crackdown on tech, and support for overseas listing of Chinese companies.
  • US Federal Reserve kicked off rate hikes with a 0.25% increase which was widely expected. However, some had priced in the possibility of 0.5% increase.

If you’re invested in both US Tech and Chinese Tech like me, your portfolio might’ve gotten a huge bump this week although you might probably still be deep in the red.

Even after this relief rally, valuations of high growth tech stocks in the US and China are still relatively attractive vs historical. I think next week might be an opportune time to restart averaging into tech.

That said, I don’t think we’re out of the woods yet and there’s still big risks of inflation-triggered recession and escalation of the Russia-Ukraine conflict. However, those are known risks which have likely been mostly priced into the market anyway.

So even though I think there’s still a 50-50 chance the market could go either way in the coming weeks, at least we’re not stuck in a vicious downtrend for now. I think if we get a good start to next week, we might see more buyers step back into the market and get a sustained rally at least in the short term.

Personally, I’m looking to nibble at some ARKK (ARK Innovation ETF), QQQ (Invesco QQQ Trust) and HST (Hang Seng Tech ETF, listed on SGX) next week. Since the market is mainly moving due to macro factors, I prefer to buy ETFs during this period. I use ARKK as a proxy for high growth stocks (except Tesla) in our portfolio, since it seems to move pretty much in tandem with them.

I won’t be backing up the truck yet due to the risks I mentioned, but I’m definitely more willing to buy now than a week or two ago. I’ll probably deploy cash equivalent to around 2-3% of the portfolio over the next few weeks. I may slow my purchases if we see signs of the rally reversing to the downside next week.

Follow me on Facebook, Telegram, Twitter and Youtube.

Disclaimer: This is not financial advice. I am not professional financial advisor nor do I work in the finance industry. Anything I write here is purely my personal opinion. Please do your own research and due diligence before investing into anything. All investments come with associated risks. Best to consult a financial advisor if you’re still unsure.

For more investing resources, see my Referrals page.

Disclosure: This post may contain affiliate links and I may get a commission when you click on the links or open an account through the links, at no additional cost to you. I only recommend products or services that I have personally tried and have found useful.

, ,