The above chart plots the SMA 20 of the market turnover overlaying on HSI. The index movement has a strong relationship with the market turnover but it is not linear.
If plot in log scale, the relationship is much better shown.
Before 2007, the market turnover was quite low, which is not shown in the above chart. But since beginning of 2007, the market turnover was increased significantly, till the peak of the direct train speculation.
In May 2008, there was an index rebound but overall turnover did not follow. The index collapsed after that. In Nov 2010, there was a turnover peak to support the index, after that, turnover went down, market collapsed. In May 2013, it happens again.
In recent years the turnover was unexpectedly low and seems on a downtrend now. It seems not about to support a higher index at this stage. With the current turnover, the index support level shall be around 20000.
In fact it is quite strange that over the last 6 years, the market average turnover is getting smaller, while we have had many new companies got listed already. The extended trading hour does not help much; the lowering of commission fee does not help much neither.
If those stupid MPF funds do not buy buy sell sell in the market, how come their performance is so low ? If they do buy buy sell sell in the market, how come the overall market turnover is getting smaller ? It is a real mystery.