This photo taken on Aug 22, 2023 shows the Hong Kong Stock Exchange in Central, Hong Kong. (EDMOND TANG / CHINA DAILY)

Dented by the sharp decline of the onshore A-share market, the Hong Kong equity market took a beating on Monday, with the city’s benchmark Hang Seng Index (HSI) dropping to a 15-month low that fell below the 15,000-point barrier.

The HSI slumped 2.3 percent to 14,961, while market turnover reached HK$112.18 billion ($14.38 billion). Hang Seng Chinese Enterprise Index (HSCEI) tumbled 2.4 percent to 5,001 while Hang Seng TECH Index dived 3 percent to 3,035.

Many sectors within the HSI continued to slide, including real estate, retail, technology, and utility stocks, with mainland property and retail shares hardest-hit

As the Chinese mainland’s one-year and five-year loan prime rates remained unchanged in January, the market is gauging whether monetary policy on the mainland will exhibit a loosening trend. On the other hand, the fall of US 10-year bond yields and the US dollar index provided some cushion to the market.

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Many sectors within the HSI continued to slide, including real estate, retail, technology, and utility stocks, with mainland property and retail shares hardest-hit.

Selling pressure on mainland property developers was strongest. Blue-chip developer China Resources Land and Longfor Properties Co plunged over 10 percent. Local property stocks New World Development, LINK REIT, and Swire Properties all fell 3.8 percent to 5 percent, while Hang Lung Properties dropped 5.8 percent.

Combining analysis of valuation and liquidity indicators reveals clear signs that Hong Kong stocks are nearing mid- to long-term bottom, according to CCB International’s research report.

“We expect the market could enter a period of stabilization and recuperation in 2024, with valuations and earnings gradually recovering, but more favorable policies and support from economic fundamentals will be needed in the future to increase market upside. The Hong Kong stock market is likely to exhibit a W-shaped upward trend in 2024, characterized by periods of weakness in the early part of the year before a recovery in the second half,” the report argued.

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CCB International said it expects the HSI to hover around 16,500 to 20,500, HSCEI around 5,500 to 7,000, and Hang Seng TECH Index about 3,600 to 4,800 within this year.