After a positive year in 2012, with a solid increase in the last half of the year – mirroring that in many other markets, the HSI started the year not far off is 5 year highs.
January saw no change in the pattern but there was evidence of some weakness in February.
This picture continued throughout March and most of April, no major drop but gradual declines.
However the second half of April saw a change in direction and the index turned up for 4 weeks , although not quite reaching its January peak.
But it was too much too quick and in late May a decline started.
This decline became more pronounced in June and the index fell relatively rapidly to levels not seen since quarter 3 2012.
But the period from late June into July saw a turnaround and solid buying saw the index rise again into August.
August itself was a month of fluctuations as the market failed o find direction due to a mix of positive and negative global sentiments.
September was a different matter, with an increase in the flow of funds to the market leading to a bit of a toppy bubble.
The next three months to the end of 2013 look more mixed, there is likely to be no overall trend for a couple of months as the market seeks to find direction.
Then December might bring a decline or at least inertia.
The pattern for the first five months of 2014 is much the same. There is not enough momentum to carry the market much higher and there is a lot of confusing information that makes investors a little nervous.
May might see some uptick though as there is a burst of enthusiasm.
June and early july are also positive times with increased investment.
But the latter part of July is tricky, trade is reduced and the index likely to fall.
But this is short lived as August looks to be an excellent month with positive investor sentiment and a distinct preference for this market.
It is back to a more mixed situation in September and October as global events impinge again.
Over this period no trend is clear as positive factors are damped out by caution.
There is a spurt at the beginning of November, even though there is still pressure from global influences and more confusing statistics.
With opposing opinions December just sees switching of preferred industries with no overall effect.
January and February 2015 are difficult. Not only are global influences having an effect but there some really hard trading conditions and a lot of investor caution.
The period March to May sees the index all over the place as factors such as currency shifts, and technology issues offset an increase in positive sentiment.
News and events come to a head around mid June and once again we see shifts not in the index as a whole but in the value of the constituents as a more cautious profile is assumed.
September, however, is a booming month. Unexpectedly positive news causes short term speculative buying.
There is more of his initially in October but then some fear sets in and the index reaches a peak. By the end of November negative news causes falls.
December is this a mixed month as investors must take stock of what has happened during the year and the index as a whole becomes less attractive.
January 2016 sees a short burst of positive sentiment but the latter part of the month looks dominated by more long term concerns.
The period February through to April is generally good. Most of the time there is enthusiasm and a return to previous peaks. But there are concerns in the background that mean those peaks can’t be exceeded and might lead to problems later on.
May is a month of major funds flow. Structurally something is occurring that will change the fundamentals of the index significantly going forward. This might be a change in constituents or events that impact significantly on those constituents.
June thus sees the end of a cycle dating back to 2004, and there is a distinct feeling of inertia – ‘where do we go from here’?
This mood continues into the next quarter. But there are positive signs as well in terms of overall global investor sentiment which is favourable.
However the overwhelming influence is one of caution and reluctant to take risks.
A briefly positive boost in August is not enough to overcome the mixed conditions which see the index going nowhere over this period in total.
The balance in October and November is also negative, with the biggest concern being the fundamental make-up of the market even with some positive PR.
So 2016 ends on a turning point in terms not so much of price but of what the market will stand for in future in what has become a new environment.