Source Finance Union
May 8thAbuc37000The Hong Kong stock market closed high for two days in a row, and the Hang Seng Index fell 41 points or 0% throughout the day.Abuc37000.9% to close at 18313 points. The Hang Seng Composite Index fell 1.Abuc37000.3% to close at 3872 points. The turnover in the big market was more than HK $120 billion, and Hong Kong stocks had a net inflow of HK $1.8 billion. Since the beginning of this week, daily inflows have continued to shrink, while northbound mainland stocks have had a net outflow of 4.04 billion yuan for two consecutive days.
After the sharp rise in late April, many Hong Kong stocks have also accumulated profit pressure, such as real estate, optional consumer and technology stocks.
On the market, funds returned to defensive high-dividend energy, telecommunications and public utilities. Yanzhou Mining Energy (1171 HK) and China Shenhua (1088 HK) rose 4.2% and 1.6% respectively, of which China Shenhua set another record high.
Sino-Thai International has pointed out that the carrying capacity at the bottom of the Hang Seng Index has strengthened since March and is expected to rise again after the consolidation of the range, but the Hang Seng Index has gone out of the "ten consecutive gains" since April 22, which has completely exceeded expectations, mainly driven by positive sentiment on the capital side.
The core reason is that foreign investors have continued to sell Hong Kong stocks to the current ultra-low-allocation positions since 2018, and recently some trading funds have sought to cover their positions due to fluctuations in overseas markets. Hong Kong stocks with low valuations are more flexible upward under the pull of heavyweights such as Internet giants favored by foreign investors, and the market then forms a strong purchasing power in FOMO (Fear of missing out).
On the face of it, this round of foreign capital inflows is the adjustment of transactional funds, not a reversal caused by the strengthening of China's economic fundamentals. Once the peripheral capital markets such as US stocks and Japanese stocks complete the adjustment and return to the upward trend, the current transactional funds are likely to re-embrace the peripheral capital markets, which may lead to periodic shocks in Hong Kong stocks.
In terms of funds, follow-up observation
1) whether the inflows of Hong Kong Stock Connect and northbound Land Stock Link will be reduced
2) whether the offshore RMB will weaken again
3) whether the upward action of stocks with high foreign holdings such as AIA (1299 HK), Tencent (700HK) and Meituan (3690 HK) will weaken.
In terms of high-frequency data, China's economy is in the doldrums. For example, the monthly sales of the top 100 real estate enterprises in April fell 13% from the previous month and 45% from the same period last year. The per capita consumption during the May Day holiday is worse than that in November last year, Spring Festival and Qingming Festival this year. Overall domestic demand is still weak but external demand is strong.
The meeting of the political Bureau pointed out that to implement a proactive fiscal policy, it is necessary to issue and make good use of ultra-long-term special treasury bonds as soon as possible, and speed up the issuance and use of special bonds. More importantly, new policies and measures have been added to the real estate industry to study and digest real estate and optimize incremental housing. The third Plenary session of the CPC Central Committee was also held in July, and everyone's expectations for the policy rose again. In the follow-up, we should focus on the intensity of policy implementation, including the strength of the real estate demand side, the issuance of bonds by the Ministry of Finance, and whether the central bank has expanded the table.
Zhongtai International also said that the relative valuation of Hong Kong stocks had been repaired by nearly half, and the risk premium of the Hang Seng Index had fallen below the rolling two-year average and gradually returned to normal. The current upward trend of Hong Kong stocks is driven by capital, and there have been signs of increased volatility in the past two days, superimposed by factors such as extremely overbought technical aspects and reduced pressure on subsequent reallocation of foreign investments. the high performance-to-price ratio at the current index level is not attractive.
However, Zhongtai International believes that the Hang Seng Index 17200 has changed from resistance to support, and the volatility center of the Hang Seng Index is expected to move up from the previous 16500 to around 17700. If the risk premium of the Hang Seng Index returns to the level it was last August, the most optimistic scenario is that the Hang Seng Index has a potential rise of 4.6 per cent in the short term (19300 points).
From the monthly dimension, strategic concernAbuc37000:
(1) Technology and biomedicine benefiting from the return of foreign capital, such as the Internet of Hong Kong stocks, after reducing costs and increasing efficiency and business adjustment, the profit expectations have stabilized and shareholders' return expectations have increased, and increased buybacks have brought about layout opportunities in the context of boosting confidence.
(2) Construction machinery, electrical equipment and consumer durables supported by industrial policies
(3) the "trade-in" of real estate has been launched one after another, the internal housing and agent construction of central state-owned enterprises will have a better performance, and the improvement of real estate expectations and risk appetite in the capital market is expected to lead to an increase in the income of internal insurance investors.
(4) Copper mines, household appliances, textile jobs, shipping, international consumer goods, etc., which benefit from the recovery of overseas economy.
(5) High dividend sectors with stable cash flow, such as telecommunications, coal and oil. In the medium term, the peak of this year has not yet reached, and the annual volatility of the Hang Seng Index is only 3900 points since the beginning of the year, and it is expected that the high in the second half of the year may reach 21,000 points, but this year's uptrend will be affected by the time it takes for domestic demand to repair and increased external volatility. The current strategy tends to buy at low prices, do not catch up.