Intensive favorable raids on Hong Kong.
The continuous upward trend of Hong Kong stocks has excited the market. Behind the improvement of the market, there are three positive supports:
First, the Hong Kong Monetary Authority (hereinafter referred to as the "Hong Kong Monetary Authority") is intensively injecting liquidity, and on April 22 and 23, respectively, it injected HK$525 million and HK$500 million of liquidity into banks through the discount window.
Second, this year marks the 10th anniversary of the launch of the Stock Connect between the Mainland and Hong Kong. John Lee, Chief Executive of the Hong Kong Special Administrative Region of China, told the media before attending the Executive Council that he will hold flagship summits and a number of forums in the Mainland, Hong Kong and overseas, focusing on the achievements, experiences and new developments of "connectivity", as well as the financing and investment opportunities brought by enterprises and funds, so as to attract more enterprises and funds to invest in the Hong Kong market.
Third, there are good signals from Hong Kong's economy. Hong Kong's economy is expected to grow by 2.5 per cent to 3.5 per cent this year as Hong Kong's merchandise exports improve, inbound tourism continues to recover, and strategic enterprises and talent inflow suggest Hong Kong's economy is expected to grow by 2.5 per cent this year, Financial Secretary Paul Chan Mo-po said at the APEC Business Advisory Council meeting.
The Hong Kong Monetary Authority stepped in
The Hong Kong Monetary Authority (HKMA) is intensively releasing liquidity, and has been selling for two consecutive days:
On April 22, the Hong Kong Monetary Authority (HKMA) launched a discount window operation to inject HK$500 million of liquidity into banks, and the basic interest rate of this operation was maintained at 5.75%.
On 23 April, the Hong Kong Monetary Authority (HKMA) released HK$525 million of liquidity to banks through the Discount Window, which currently sets the base rate at 5.75%.
The Discount Window is a standing Hong Kong dollar liquidity facility of the Hong Kong Monetary Authority (HKMA) to ensure the smooth operation of the interbank payment system. This initiative demonstrates that the Hong Kong Monetary Authority (HKMA) plays an active role in maintaining the stability and liquidity of the financial markets.
Since the beginning of 2024, the Hong Kong Monetary Authority (HKMA) has repeatedly used the Discount Window to inject liquidity into banks, with a cumulative amount of about HK$6.897 billion.
Specifically, the Hong Kong Monetary Authority (HKMA) injected funds on January 3, January 9, January 29, March 18, March 21 and March 26 this year, involving HK$1.7 billion, HK$1 billion, HK$2.114 billion, HK$138 million, HK$20 million and HK$900 million respectively.
This series of actions reflects the complexity and uncertainty of the current financial markets. Banks need more liquidity to cope with possible risks and challenges, while the Hong Kong Monetary Authority (HKMA) needs to keep a close eye on market developments and take timely measures to maintain financial stability.
10th Anniversary of Connectivity
In the past two days, the Hong Kong stock market has collectively soared. According to Wind data, on April 23, the southbound capital turnover was HK $37.063 billion, with a net inflow of HK $2.340 billion. This is the 17th consecutive trading day that southbound funds have recorded net purchases, totaling HK$84.2 billion, and the cumulative net buying amount has increased to HK$202.45 billion during the year.
This year marks the 10th anniversary of the launch of Stock Connect between the Mainland and Hong Kong (Stock Connect). On 23 April, John Lee met with the media before attending the Executive Council and revealed that the HKSAR Government and HKEX were preparing a number of key promotional activities. In order to attract more funds to trade Hong Kong stocks, the HKSAR Government will step up targeted efforts to introduce the latest expansion measures and new products to Mainland institutional investors and the securities industry, so as to enhance the understanding of "mutual access" among the Mainland investment community.
In terms of attracting enterprises, Mr Lee said that the Office for Attracting Strategic Enterprises, Invest Hong Kong of the HKSAR Government and Hong Kong's economic and trade offices in the Mainland and overseas will actively promote and provide assistance to key enterprises to attract them to raise funds in Hong Kong. HKEX will continue to organise and participate in various activities to introduce the listing pathways of Hong Kong's financial market to prospective companies, especially leading enterprises in the Mainland industry, and to assist in the preparation of applications.
According to the first quarter report of the public fund in 2024, Hong Kong stocks have become the key direction of increasing positions, and the "Shanghai-Hong Kong-Shenzhen fund" managed by a number of star fund managers has a phenomenon of "Hong Kong content" exceeding 50% or even 60%, and Internet leaders such as Tencent Holdings have returned to the heavy stocks of many star managers, highlighting the cost-effectiveness and attractiveness of the Internet sector of Hong Kong stocks.
At the same time, the outlook of foreign institutions on Chinese assets is also undergoing a major shift. On April 23, UBS Group upgraded the ratings of A-shares and Hong Kong stocks to "overweight", and upgraded the ratings of Chinese stocks to "overweight". Sunil Tirumalai, chief strategist of UBS Global Emerging Markets Equities, said that among the constituents of the MSCI China Index, the consumer and internet sectors have a high weighting, and the performance is expected to perform better as consumption shows initial signs of recovery.
Market analysts believe that UBS's rare upgrade of China's asset rating conveys a positive judgment on the fundamentals of the A-share and Hong Kong stock markets, the macroeconomic environment, corporate earnings prospects and policy trends, or highlights the initial optimism that the Chinese market is starting to gradually improve. The rating of internationally renowned institutions may effectively boost market sentiment, attract more domestic and foreign investors, and stimulate investment enthusiasm.
A positive sign for Hong Kong's economy
On April 23, according to the website of Radio Television Hong Kong, the Financial Secretary of Hong Kong, China, Paul Chan, said in his speech at the event that Hong Kong's economic growth is expected to be between 2.5% and 3.5% this year, and the performance in the first quarter is in line with the expectations of the range, with unemployment and inflation at a low level.
He believes that the China Securities Regulatory Commission (CSRC) launched five measures to support Hong Kong's capital market last week, including the importance of supporting mainland leading enterprises to list in Hong Kong, if the development and profitability of the enterprises in Hong Kong are good, it will help attract more international institutional investors and bring more liquidity to Hong Kong;
Mr Chan pointed out that apart from the development of the financial sector, the Government has high hopes for Hong Kong's I&T, believing that it will work closely with Shenzhen in the future, and that Hong Kong's advantages will be more obvious if there is a flow of data, talent and capital.
Mr Chan pointed out that since December 2022, about 160,000 applications have been approved under various talent admission schemes, of which more than 110,000 have come to Hong Kong.
Chan further pointed out that after the epidemic, Hong Kong's tourism industry drove Hong Kong's economic growth by 3.2% last year, and the number of tourists visiting Hong Kong reached 34 million last year, slightly more than half of the pre-epidemic period, and it is expected that the number of large-scale events will further rise to 50 million this year, private consumption and overall investment have also improved, but the high interest rate environment and geo-economic fragmentation have suppressed commodity exports, and the inflation rate is expected to remain at a low level of 1.7%, and the unemployment rate is about 3%.
Mr Chan said Hong Kong remained attractive to global business, investment and talent. According to the survey, there are more than 9,000 Hong Kong-based companies with overseas parent companies, similar to the pre-pandemic period. Since the establishment of the Office of Strategic Enterprises in December 2022, Hong Kong has attracted nearly 50 key enterprises to expand their business in Hong Kong, and they will invest more than US$5 billion and create more than 13,000 jobs in the next few years. In addition, InvestHK has attracted more than 380 other companies, with a total investment of US$7 billion to US$8 billion.
At the same time, confidence in Hong Kong businesses is also picking up. According to CPA Australia's 2023-2024 Asia Pacific Small Business Survey, 69% of Hong Kong small businesses expect to achieve growth in 2024. According to the latest survey, Hong Kong's small businesses have increased confidence in Hong Kong's local economy, with 73% of respondents expecting Hong Kong's economy to continue to grow this year.
Editor-in-charge: Tactical Heng
Proofreading: Wang Chaoquan