Source: China Fund Daily
Maureen
The Hong Kong stock market is strong "five Lianyang".
Hong Kong stocks rose sharply this weekCryptop2egamesThe Hang Seng Index and the State-owned Enterprises Index rose 8% respectively.Cryptop2egames.80%, 9Cryptop2egames.10%, the performance of the Hang Seng Technology Index was particularly eye-catching, with its highest performance in more than a year.
Can the current Hong Kong stock market be sustainable?Cryptop2egames? A number of brokerage analysts interviewed believe that the five major cooperation measures of the SFC with Hong Kong, coupled with large-scale share buybacks and more active dividend payouts by representative companies of Hong Kong stocks, have significantly improved the liquidity of Hong Kong stocks. Compared with the major overseas stock markets, Hong Kong stocks have lower valuations and higher margin of safety; compared with the relatively crowded dividend assets of A-shares, Hong Kong stocks have higher expected returns for deep-value investors.
The window for long Hong Kong stocks has come.
With regard to the strong rebound of Hong Kong stocks, Fang Yi, chief strategist at Guotai Junan Securities, believes that since 2021, Hong Kong stocks have experienced a long period of adjustment and a relatively large extent. one of the very important reasons is the contraction of liquidity and the reduction of risk appetite for Hong Kong assets. On April 19, the China Securities Regulatory Commission issued five capital market cooperation measures to broaden the capital flow channels for Hong Kong's capital market, improve market liquidity and stability, broaden investors' asset choices and smooth the listing channels of enterprises.
"Foreign capital is the main force to increase positions, and the return trend is expected to continue; driven by policies and high dividends, southward funds are also increasing." Chen Guo, chief analyst of Citic Construction and Investment Rights Strategy, mentioned that Hong Kong stocks are expected to continue to rise driven by both domestic and foreign capital, and the best long window for Hong Kong stocks this year has arrived.
Focus on high dividend + fundamental repair
Chen Guo believes that the high dividend market has prevailed since February this year, and domestic institutions as a whole take high dividends as the mainstream style. The core reason for attracting southward capital inflows is that Hong Kong stocks have higher dividend yields and lower valuations than A shares, and have a higher performance-to-price ratio. The scope of allocation of domestic capital to Hong Kong stocks is also mainly concentrated in dividend stocks, and the southward flows to the top so far this year are mainly financial, public utilities and other dividend sectors.
Whether the future investment in Hong Kong stocks will still focus on the allocation of dividend sectors? Wang Yi pointed out that the observation windows of the core clues of the main line switching are all after the middle of the year, and historically, dividend value is usually or relatively dominant when the market risk appetite is weak. Therefore, before the shift of risk preference at home and abroad, it is suggested that we should continue to pay attention to the intersection of high dividend repurchase and fundamental repair.
Fang Yi believes that the high-dividend industries of Hong Kong stocks, such as communications operators, energy and public utilities, are still the focus of allocation, while we can use a longer-term perspective to layout high-quality Internet leading companies. In his view, the policy level has clearly pointed out that the prudent introduction of contractionary policies, Hong Kong stocks Internet corporate policy adjustment is the earliest, the longest cycle, the current expected uncertainty has declined, and its valuation has been fully adjusted.
Three variables affect the future trend
Can the rising market continue? Combined with the views of analysts, three major variables support the sustained recovery of Hong Kong stocks.
First of all, Fang Yi pointed out that recently, the market has been constantly adjusting the timing and extent of the Fed's interest rate cut, which has affected the rise in interest rates on US bonds, and there is greater pressure on emerging market currencies to compete for devaluation. Under the linked exchange rate system, the exchange rate pressure on the Hong Kong dollar is less relative to that of other regions, so low valuations and more stable currency values have made the global allocation of the Hong Kong stock market more attractive.
Wang Yi also mentioned that the recent EPFR caliber statistics of active allocation of foreign capital to Hong Kong stocks showed a narrowing trend, there is a demand for capital "reallocation" of foreign capital or the main force of recent inflow improvement.
Second, China's economy shows signs of picking up. The latest economic data show that China's economy is basically doing well in the first quarter, and the improvement in fundamentals will support the stock market.
Third, the current financial disclosure window, overseas Chinese stocks have basically completed the 2023 annual report performance disclosure. With the "core Hong Kong stocks" of 397 Hong Kong stocks that have disclosed quarterly results as the stock pool, the Hang Seng Index's net profit grew by about 2.8 per cent. Structurally, the new economy sector led by Hang Seng Technology is in the forefront of profitability.
Wang Yi pointed out that under the circumstances of the expected withdrawal of interest rate cuts in US stocks, and the relatively "expensive" valuation of some external strong markets (such as Japan, India, etc.), the annual growth report of Hong Kong stocks picked up and overlaid the demand for reallocation of some funds, superimposed on the recent easing of geographical disturbances, a decline in the demand for risk aversion of funds, and the recent upgrading of Hong Kong stocks by some foreign institutions.
At the same time, the improvement of domestic and foreign resonance pushed Hong Kong stocks upward. Southbound funds have continued to flow into Hong Kong stocks since February, with cumulative net inflows exceeding 150 billion yuan, and marginal influence rebounded to an all-time high of 34 per cent. Xingsheng International believes that next, the main axis of Hong Kong stocks will continue to revolve around the RMB stock trading counter will be included in the Hong Kong Stock Exchange news, the relevant shares will also be relatively strong.