Hong Kong stocks are a gold pit

Hong Kong stocks are a gold pit

Looking for certainty in the stock market is a matter of looking at it together. The first consideration is to choose a country or region, after the country and region market is selected, it is necessary to choose the industry, looking for individual stocks in the industry, which is to find certain profit opportunities from top to bottom.

Hong Kong stocks are a special market, and at a specific time, there will be certain profit opportunities.

The Hong Kong stock market refers to the stock market in Hong Kong, which is mainly listed on the Hong Kong Stock Exchange.

At the end of 2021, the total market value of the Hong Kong stock market was about US$5.44 trillion, and the total market value of mainland companies listed in Hong Kong accounted for 79% of it.

Due to the special status of Hong Kong stocks, there are often special certainty buying opportunities.

In November 2023, the Hang Seng Index of Hong Kong stocks fluctuated between 17,000 and 18,000 points, which is at a historical low. pE is 8-fold and the percentile is at 4%. The PB is 0.8 times and the percentile is 1.8%. Such a low point is a gold pit.

Take a look at the image below.

At this time, the valuation of Hong Kong stocks is extremely low. Due to a variety of reasons, Hong Kong stocks have a historic bottom, which is a rare gold pit.

In the eyes of ordinary investors, Hong Kong stocks are volatile, and many stocks will disappear and eventually be delisted. If the operation is not done properly, there will be no slag left. Are there any investment opportunities in Hong Kong stocks? The answer is: Yes, the focus is on Hong Kong blue chips, and you can make efforts to find them.

Blue chips refer to long-term stable growth, large-scale, traditional industrial stocks and financial stocks. In the Hong Kong stock market, blue chips usually refer to the stocks of large enterprises that are in a significant dominant position in the industry, with good performance, active trading and generous dividends.

As an investor in A-shares, I am not very familiar with Hong Kong stocks, but the H-shares in Hong Kong stocks are companies in the mainland, which are listed in the mainland and are also listed in Hong Kong stocks.

H-shares are shares of Chinese enterprises registered in the Mainland and listed in Hong Kong. Individual investors in A can set up a "Hong Kong stock through train" business at the outlets of major securities companies and invest directly in H shares.

Since a mainland company is listed on the A-share market and the Hong Kong stock market at the same time, it means that a commodity is traded in two markets at the same time. We can use this rule to choose the big blue chips in H-shares, especially the central enterprises, which are currently at a low valuation and are a rare gold pit.

For example, there are some big blue chips of Hong Kong stocks hidden in some of the following areas, and the valuations are extremely low, which is a rare buying opportunity.

Ping An H shares: The price is 40 Hong Kong dollars, a discount of 16%, pE is 8 times, and the dividend rate is 6%.

ICBC H shares: the share price is HK$3.8, the discount is 25%, the pE is 4 times, and the dividend rate is 9%.

PetroChina H shares: The share price is 5.2 Hong Kong dollars, the discount rate is 32%, the PE is 5 times, and the dividend rate is 9%.

China Shenhua H shares: the share price is 25 Hong Kong dollars, the discount rate is 35%, the pE is 8 times, and the dividend rate is 11%.

China Railway Construction H shares: the share price is 4.5 Hong Kong dollars, a discount of 47%, pE is 2 times, and the dividend rate is 6%.

China Communications Construction H shares: the share price is HK$3.5, a discount of 60%, pE is 2 times, and the dividend rate is 6%.

China Mobile H shares: The share price is HK$64, a 35% discount, pE is 10 times, and the dividend rate is 7%.

China Telecom H shares: The share price is HK$3.5, the discount is 37%, the pE is 10 times, and the dividend is 7%.

In Hong Kong stocks, there are many large blue-chip H shares like this. They are all listed companies in the mainland, with good quality, stable operation and high dividend rate, because they are listed on the Hong Kong stock market, so the price is greatly discounted, far lower than that of A shares, at this time, you can choose the opportunity to enter the market.

Many people know the famous American investor Sloes. Sloes has invested for more than 40 years, with an annualized return of 16%, second only to Warren Buffett. Mr. Sloss, is the easiest for ordinary investors to learn.

In terms of H-share investment, you can adopt the strategy of Schloss.

Schloss's stock selection strategy is largely based on the philosophy of low valuation and contrarian investing. He tends to look for stocks that are trading below their valuations, especially those that are under-marketed and in trouble, as these companies tend to have large price discounts.

When it comes to stock picking, Schloss is very focused on the importance of diversification, and he usually holds 50-100 stocks, and no one stock makes up more than 20% of his portfolio. This diversification strategy can reduce the impact of a single stock or sector risk on the entire portfolio.

In addition to diversification, Schloss also emphasizes the quality control of enterprises. He carefully examines each company's financial statements to understand its financial health, profitability, and growth potential.

In terms of holding strategy, Schloss usually holds for a longer period. His shareholding cycle is generally about four years, and the annual turnover rate is about 25%, that is, 25% of the shares are sold every year, and the turnover is every four years. This strategy allows him to better grasp the long-term value of the company and reduce the impact of transaction costs and taxes.

Schloss's investment philosophy is "don't follow the crowd, make your own decisions", and he advocates finding stocks with low valuations, diversifying and keeping a tight eye on the quality of companies. His investment strategy, in the long run, far outperforms the returns of the broader market.

At present, the large blue chips in H-shares fully meet Mr. Sloss's stock selection criteria. It turns out that Mr. Schloss's operation strategy is correct, we can copy it, copy his work, look for undervalued stocks in H-shares, and then, diversify long-term holdings, we will definitely achieve excess returns.

Through the observation and analysis of Hong Kong stocks, we can draw the conclusion that in the global capital market, you can find stocks whose prices are lower than their value, that is, the intrinsic value of a good company is 1 yuan, because the market pricing is wrong, and the stock price is only 0.5 yuan. At this point, there is a certain profit opportunity, and you can buy boldly.

Around 2023, Hong Kong stocks are such a rare opportunity. In this historic bear market, it's all about choosing good stocks. The so-called good stocks are stocks that have certain opportunities to make money, carefully selected, and calmly bought. In a bear market, measure the level of trading, don't want the market value is more, or less, the most important thing is to save stocks, save the number of shares, and firmly get the good equity.

According to the theory of mean reversion, when the market is bad, buy stocks with certainty. When the stock price returns to value, the stock price will naturally rise, and at this time, gradually cash out the chips in your hand, turn the shares into banknotes, cash in the profits, and complete the transaction.