Produced by Flower Finance Observation
Editor丨Duozi
With the passage of time, the Hong Kong stock market is losing its former glory, and the liquidity problem of Hong Kong stocks is becoming increasingly prominent, with more than 100 listed companies having zero turnover.
On April 23, the new tea drink "Tea Baidao" raised HK$2.586 billion at an issue price of HK$17.50 per share, becoming the largest IPO raised by Hong Kong stocks this year and officially listed on the main board of the Hong Kong Stock Exchange.
However, on the first day of listing, Chabaidao fell below the issue price, and the intraday decline was close to 40%. As of the close, Chabaidao fell 26.86% to HK$12.80 per share, and the total market value shrank to HK$19 billion.
From the perspective of performance, tea Baidao is quite growth. From 2020 to 2023, revenue will increase from 1.080 billion yuan to 5.704 billion yuan, with an average annual compound growth rate of 74.15%, and net profit will increase from 238 million yuan to 1.151 billion yuan, with an average annual compound growth rate of 69.11%.
With such good results, Chabaidao is still broken, and even the price-earnings ratio is as low as about 15 times, and the Hong Kong stock market has not given Chabaidao a high valuation for high growth, which has further aroused people's concerns about the liquidity of Hong Kong stocks.
571 listed companies had zero turnover on the day
In recent years, the Hong Kong stock index has declined significantly. Since 2021, the Hang Seng Index has continued to fall, and in just a few years, the index has fallen by more than 40%.
The continued decline has led to an increasingly severe liquidity problem in Hong Kong stocks. As of March 2024, the total value of the Hong Kong stock market was RMB30.3 trillion, but the average daily turnover was as low as RMB111.2 billion.
The liquidity of a large number of companies is not optimistic. As of April 23, Tencent was the only company in the Hong Kong stock market with a daily turnover of more than HK$10 billion, and among the 2,666 listed companies, as many as 571 Hong Kong-listed companies had zero daily turnover.
The lack of market liquidity has simultaneously exacerbated the problem of financing difficulties for listed companies. In the first quarter of 2024, the amount raised in Hong Kong's IPO market was 4.7 billion yuan, down 30% year-on-year, and the amount of funds raised by Hong Kong Stock Exchange fell to the tenth place in the world.
The valuation of Hong Kong stocks has also been infinitely compressed. As of March 31, 2024, the PE value of the Hang Seng Index has dropped to 9.45x, and the price-to-earnings ratio is at a historically low level of 8.17% on historical data.
Compared with the valuation of similar overseas stocks, Hong Kong stocks are almost fractured. Taking leading Internet companies as an example, the PE value of Alibaba, JD.com, NetEase, and Baidu is about 10-15 times, and the PE value of Apple, Google, Microsoft, and Amazon in the United States is about 25-60 times.
As far as the current market situation is concerned, a large number of listed companies and venture capital institutions hope that Hong Kong stocks can quickly get rid of the current state and regain their strength, but this is not something that can be achieved overnight.
The amount of IPO funds raised fell sharply
From 2019 to 2021, it is fashionable to go public in Hong Kong, and Chinese giants that have been listed on the US stock market have also chosen to list in Hong Kong for the second time, including Alibaba, JD.com, Xiaopeng, Ideal, etc., all of which have made a lot of money in Hong Kong stocks.
Times are changing, and now Hong Kong stocks, but even a cup of tea is not digested well, after reading the performance of tea Baidao, many investors showed disappointment.
In fact, before Tea Baidao, the trend of Hong Kong stocks breaking was very obvious. Among them, J&T Express, a "star IPO" company that has swept the market in recent years, landed on the Hong Kong Stock Exchange in October last year, and its share price has fallen by more than 40% so far.
Kuaigou Taxi, the "first freight stock in the city", has an opening market value of HK $14 billion, and now the market value is only HK $160 million, becoming a "penny stock".
Even Tencent, the "king of stocks", has fallen by 50% since 2021, and although it has a market value of 3.25 trillion yuan, its daily turnover is often less than 10 billion Hong Kong dollars.
In the fourth quarter of 2023, the IPO funds raised by Chinese companies in Hong Kong reached a high of 12.649 billion yuan, and in the first quarter of 2024, the amount of IPO funds raised has dropped significantly to 3.139 billion yuan, down 75% quarter-on-quarter and 24% year-on-year.
On March 26, Alibaba Group also abruptly announced that its logistics subsidiary Cainiao had withdrawn its initial public offering and listing application on the Hong Kong Stock Exchange.
Previously, Tsai Chongxin said in an interview with the media that in the current market environment, Yu Cainiao hopes to wait for a better listing opportunity.
It is imperative to boost market confidence
In the face of the cold Hong Kong market, Hong Kong Stock Exchange CEO Chen Yiting said at the forum a few days ago that it was caused by the macroeconomic, high-interest rate environment and geopolitical situation.
In the past few years, the real estate industry, which has been booming for decades, suddenly shut down, and the domestic macroeconomic growth gradually slowed down, resulting in pessimistic expectations for economic recovery by foreign investors, which triggered many foreign investors to sell Hong Kong stocks.
The outbreak of historic inflation in the United States, the Federal Reserve began to raise interest rates violently in the past 40 years, raising interest rates to more than 5% in a short period of time, such a high risk-free return, and at the same time further led to the withdrawal of foreign capital from Hong Kong stocks and the purchase of US dollars.
There are many crises, and the call for improving the liquidity of the Hong Kong stock market is getting louder. In October last year, John Lee, the chief executive of the Hong Kong SAR government, announced that the stamp duty on Hong Kong stock transactions would be reduced from 0.13% to 0.1%.
According to a spokesman for the Hong Kong SAR government, the stamp duty cut will reduce transaction costs for investors, boost market sentiment and enhance the competitiveness of the Hong Kong stock market.
Subsequently, on 19 April, the China Securities Regulatory Commission (CSRC) announced five measures for capital market cooperation in Hong Kong, including relaxing the scope of eligible products for equity ETFs under Stock Connect, including REITs in Stock Connect, supporting the inclusion of RMB stock trading counters in Hong Kong Stock Connect, enhancing the Mutual Recognition of Funds arrangement, and supporting the listing of leading mainland enterprises in Hong Kong.
The above five measures have deepened the depth and breadth of mutual access between the capital markets of the Mainland and Hong Kong, which will help enhance the liquidity of the Hong Kong stock market and attract more capital to Hong Kong.
From the current point of view, the valuation of Hong Kong stocks is at a historically low level, and listed companies have begun to increase their buyback efforts. In 2023, the amount of Hong Kong stock buybacks will reach a record high of HK$125.9 billion.
After the cold winter and the wax moon, in the face of the continuous decline in valuation, the stock prices of companies that have been cut in the Hong Kong stock market one after another are obviously more valuable for investment in comparison.
Warren Buffett has a famous investment saying: "I am different from others, I am afraid when others are greedy, and I am greedy when others are fearful." ”
(Article source: Flower Finance Observation)
*This article is based on publicly available information and is for information purposes only and does not constitute any investment advice