The plunge in HK on 10.19

Given all kinds of news and reports regarding the plunge in HK market yesterday, some main conclusions from my perspective can be drawn as following:

1) the market has already reached a relatively high level over the year, hence any negative news can trigger selling.

2) People's Bank of China Governer Zhou Xiaochuan's warings on rising household debt and his mention about the Minsky Moment could have stimulated the selling in HK.

3) Blue-chip stocks and property developers facing higher selling pressure bc there's concern that hawks at the Fedral are gaining edge. if US interest rate hikes more quickly, blue chips will fall as Hibor rises.

4) the market also got panicked over the political turmoil in Spain, investers are sellling the stocks that have big exposure to European market like HSBC, as well as the stocks that had rallied a lot this year.

other causes may include:

1) a lot of callable bull contracts are tied to levels between 28150 and 28199 points on the index, and they'll be terminated if it falls below that level in intraday trading (HSI fell to as low as 28095 Thursday)

2) the spike in HK's hibor rate or jitters about spain may promoted some selling, then the termination of callable contracts exacerbated the declines.

3) investors got disppointed on Xi's marathon speech which they don't think provide any breakthroughs, so the market is pulling back.