The enthusiasm of funds to buy Hong Kong stocks has not diminished.
After rising for two consecutive days from the bottom, Hong Kong stocks ushered in an adjustment on December 18, however, southbound funds performed positively, with a single-day net purchase of about 10.7 billion yuan (RMB, the same below), which was the third single-day net purchase amount of more than 10 billion yuan this year.
The weak market has not hindered the enthusiasm of southbound funds for Hong Kong stocks, and the pharmaceutical and Internet technology theme funds that have fallen high this year are the most favored by funds, and funds continue to buy the two major sectors.
The Hang Seng Index has fallen for four consecutive years, and looking ahead, institutions believe that with the increase in policy stimulus and the decline in overseas interest rates, the fundamentals of Hong Kong stocks are already on the way to recovery.
Tens of billions of funds poured into Hong Kong stocks in the south
On December 18, the Hong Kong stock index collectively declined, with the Hang Seng Index falling 0.97% and the Hang Seng Technology Index falling 1.32%. The collective performance of the automobile industry chain is sluggish. On the list of gainers, affected by the sudden armed attack in the waters of the Red Sea, port transportation stocks strengthened against the market.
In terms of individual stocks, Dongfang Selection rose nearly 22%, shipping stock SITC International rose nearly 15%, SenseTime fell more than 11%, and Pharmacist Bang's share price fell 28%, and the company's stock price changed greatly mainly due to the catalytic impact of short-term events.
Since the beginning of this year, the overall performance of Hong Kong stocks has been poor, once hitting a new low of the year on December 11, and the performance of Hong Kong stocks has also been repeated recently. Xing Cheng, manager of the Hang Seng Former Hong Kong Stock Connect Select Mixed Fund, believes that the main factors supporting the rebound of Hong Kong stocks from the end of October to November are more from the marginal improvement of the external environment, such as the marginal improvement of liquidity at the denominator end of the valuation of Hong Kong stocks brought about by the decline in long-term US bond yields, and the easing of Sino-US relations has boosted the risk appetite of Hong Kong stocks.
It is worth noting that the attitude of funds towards Hong Kong stocks is to buy more and more, and the weak market has not hindered the enthusiasm of southbound funds for Hong Kong stocks, and on December 18, more than 10 billion funds poured into Hong Kong stocks in the south, which is also the third time this year that southbound funds have bought Hong Kong stocks in a single day. As of December 18, southbound funds have accumulated a net purchase of nearly 299 billion yuan of Hong Kong stocks this year.
As of December 18, a total of 205 companies in the Hong Kong stock market have actively participated in the repurchase this year, with a repurchase amount of more than HK $116.75 billion, a record high.
Bottoming out of the two major sectors of Hong Kong stocks
As of December 18, the Hang Seng Index has fallen 15.94% and the Hang Seng Tech Index has fallen 9.64% this year, leading the decline among the world's major stock market indexes. In terms of specific industries, only the energy and telecommunication services sectors rose during the year, while the real estate, medical and consumer sectors led the decline.
From the perspective of ETFs tracking Hong Kong stocks, only the Hong Kong Stock Connect dividend ETF rose during the year, and the pharmaceutical and Internet technology theme funds fell the most, such as the Hong Kong Stock Connect Pharmaceutical ETF, Hang Seng Medical ETF, Hang Seng Biotechnology ETF, Hang Seng Internet ETF, etc., which lost more than 20% during the year.
From the perspective of ETF fund flow, the pharmaceutical and Internet technology theme funds that have fallen the most this year are the most favored by funds. In the long run, ChinaAMC Hang Seng Internet Technology ETF, ChinaAMC Hang Seng Technology ETF, Bosera Hang Seng Healthcare ETF, Huatai Pineapple CSOP Hang Seng Technology ETF and GF CSI Hong Kong Innovative Drug ETF have net inflows of 13.170 billion yuan, 9.711 billion yuan, 8.936 billion yuan, 8.332 billion yuan and 7.346 billion yuan respectively this year.
Even in the short term, the two major sectors are the "favorites" of funds. Since December, ChinaAMC Hang Seng Technology ETF, ChinaAMC Hang Seng Internet Technology ETF, Huatai Pineapple CSOP Hang Seng Technology ETF and Bosera Hang Seng Healthcare ETF have net inflows of 1.849 billion yuan, 1.813 billion yuan, 998 million yuan and 520 million yuan respectively.
Looking ahead, Xing Cheng believes that the Hong Kong stock market may remain range-bound and dominated by structural opportunities. The height and sustainability of the subsequent rebound in Hong Kong stocks also require the cooperation of more macro support policies to further restore the medium- and long-term confidence of residents and enterprises.
Overall, Xing Cheng believes that the medium-term trend of China's moderate economic recovery and the Fed's monetary policy shift is relatively certain, and the current low valuation level of the Hong Kong market and the introduction of potential economic policies are expected to provide support. Lower valuations will not only provide a cushion against external volatility, but will also be expected to make the Hong Kong stock market more sensitive to growth recovery and policy signals, thereby providing greater resilience.
Institutions: Hong Kong stocks are embarking on a journey of hope
The Hang Seng Index has fallen for four consecutive years, and looking ahead, institutions generally believe that many sectors of the Hong Kong stock market have fallen out of opportunities.
Xing Cheng believes that although the macro policy is not enough to support the bottom, it may correspond to the short-term market has a top and a bottom, it is recommended to pay attention to the balanced allocation strategy, on the one hand, focus on the growth track performance visibility of high-visibility, large volume of leading enterprises, on the other hand, pay attention to low valuation and high dividend high-quality targets.
In the medium term, overseas liquidity tends to ease as a whole, which is conducive to the performance of Hong Kong stocks.
Essence Securities pointed out in its 2024 investment strategy that Hong Kong stocks are embarking on a journey of hope. With the increase in policy stimulus and the decline in overseas deterministic interest rates, the fundamentals of Hong Kong stocks are already on the way to recovery.
In terms of sectors, Essence Securities believes that Hang Seng Technology is a sector with a more obvious upward revision of EPS in many industry indexes, and the continuous improvement of ROE has begun to take effect; the business cycle of high-tech manufacturing such as military industry, communications, home appliances, and semiconductors has been improving, and the valuation is not high, the upstream cost is currently at a low level, and the profitability has improved significantly; the decline in overseas interest rates will drive the valuation repair of the innovative drug industry; and enterprises with long-term dividend returns are still more attractive to prudent investors.
For the Hong Kong stock technology sector, China Merchants Fund believes that the current valuation of the sector is low, and the factors suppressing the sector will gradually ease over time, or it may be a good time for allocation. The Internet industry has both consumption and technology attributes, and the leading Internet companies in the Hong Kong stock market have a great advantage, but they have not received more attention from the market, and the technology attributes have not been reflected in the Internet sector.
Ping An Fund believes that Hong Kong stock medicine is an industry worth paying attention to, and the industry is expected to meet a reversal in 2024, first of all, demographic changes will support the long-term demand of the pharmaceutical industry, in addition, innovative drugs have been approved one after another, to meet a new round of innovative product cycle, and it is expected that in the next 1-3 years, a number of innovative blockbuster varieties will be approved and listed, becoming the core driving force for the growth of the innovative drug market.
Editor-in-charge: Tactical Heng
Proofreading: Zhu Tianting