In the past two years, due to the impact of multiple factors, Hong Kong and A markets have been under significant pressure, which has broken the hearts of many investors.
This week, there has been a significant shift in the style of the secondary market, with the Hong Kong stock market seemingly taking the lead in launching a counteroffensive, with the Hang Seng Index showing an upward trend for five consecutive trading days. At the same time, the A-share market also ushered in an important turning point on April 26 and ushered in an explosive moment.
Is the outlook for Hong Kong stocks and A-share markets worth looking forward to?
Hong Kong stocks soared first, and A-shares followed
On April 22, the Hang Seng Index jumped 1.77%, and at that time, investors didn't think anything special, and the ups and downs were normal. However, in the next 4 trading days, the Hang Seng Index jumped one after another, and the volume increased by 8.80% in 5 trading days, which is also the strongest weekly performance in 12 years, which is a bit bright.
More critically, from the perspective of individual stocks, Tencent Holdings (00700. HK) rose 14.68% in the same period, Alibaba-SW (09988.HK) rose 12.89%, Meituan-W (03690.HK) rose 21.30%, Xiaomi Group-W (01810.HK), JD.com, Baidu, Ctrip, and Kuaishou also rose.
These Internet leaders are the essence of Hong Kong stocks, the stars in the market, and the "guiding signs" in the minds of many investors, and their collective rise is a key signal that cannot be ignored.
According to analysis, there may be three reasons for the recent surge in Hong Kong stocks:
1) policy support, including the CSRC's statement that it will deepen cooperation with Hong Kong, etc.; 2) the spillover of the high-dividend market of A-shares, which is reflected in the continuous inflow of southbound funds, and most of the purchases are in the direction of high dividends; 3) the fundamental resilience of the Internet industry is actually significantly underestimated by the market.
Compared with the Hong Kong stock market, the A-share market has been a little quiet recently, and the Shanghai Composite Index has been fluctuating back and forth between 3,000 and 3,100 points, making people drowsy.
However, on April 26, the A-share market ushered in a change, with major indices closing up across the board, and the trading volume of the two cities once again exceeded the trillion level. Among them, the ChiNext index rose by 3.34%, the Shenzhen Component Index rose by 2.15%, the CSI 300 rose by 1.53%, and the Shanghai Composite Index rose by 1.17%.
In addition, northbound funds are known as "smart money" and are an important reference indicator for some investors. According to data from Minsheng Securities, since February, northbound funds have actually been in a state of net buying.
On April 26, northbound funds unilaterally bought 22.449 billion yuan today, setting a new high since the opening of the Cross-Hong Kong Stock Connect, of which 11.323 billion yuan were bought through Shanghai-Hong Kong Stock Connect and 11.126 billion yuan were bought through Shenzhen-Hong Kong Stock Connect.
Previously, when A-shares were under significant pressure, northbound funds were mostly flowing out, which had a great impact on investors, and this record high net purchase was also a key signal.
In addition, from a fundamental point of view, after entering 2024, the A-share market will continue to promote reform, and it will be very strict in giving back to shareholders. Among them, in the new "National Nine Articles" released on April 12, a dividend risk warning content was also added.
Taking the main board as an example, if the net profit of the most recent fiscal year is positive, and the undistributed profit of the parent company at the end of the statement year is positive, the total cumulative cash dividends of the last three fiscal years are less than 30% of the average annual net profit of the last three fiscal years, and the cumulative dividend amount of the last three fiscal years is less than 50 million yuan.
In addition to the infrared, the A-share market is also more strictly regulated in terms of delisting and financial fraud.
These reforms are expected to shape a healthier and sustainable A-share market.
Many institutions are optimistic about Hong Kong and A markets
It is worth mentioning that a number of research institutions have recently expressed optimism about the potential of Hong Kong and A.
Recently, UBS, a major international bank, joined the bullish ranks of the Hong Kong stock market and the entire Chinese stock market, upgraded its recommendation rating for the entire Hong Kong stock market, and upgraded the MSCI China Index, the benchmark index for overseas investors.
UBS upgraded the MSCI China Index and the Hong Kong stock market to "overweight", citing the resilience of corporate earnings and strong policy support.
Morgan Stanley and other foreign institutions have also recently released reports pointing out that global funds are showing a trend of returning to the Chinese stock market. Morgan Stanley's strategists also mentioned that regional active funds have begun to increase their holdings in Chinese growth stocks and technology stocks.
Goldman Sachs also said in the report that international investors' sentiment, risk, appetite and interest in China's stock market are improving, and it is expected that even if the fundamentals are not considered, with the improvement and standardization of the A-share capital market system, the stock market still has more value to release, with the potential for valuation improvement of about 20%, and the optimistic expectation is that there may be a potential upside of up to 40%.
Goldman Sachs is bullish on A-shares from fundamentals to policy, to capital market valuation and the performance of listed companies.
China Securities Construction Investment also pointed out that the recent focus of foreign investment in the Asia-Pacific region has shifted from Japan to Hong Kong stocks, and the liquidity of Hong Kong stocks has been greatly improved. In terms of domestic investment, driven by favorable policies and high dividends, southbound funds have increased sharply recently, further consolidating the upward trend of Hong Kong stocks. China Securities Construction Investment believes that the best long window for Hong Kong stocks this year has arrived.
epilogue
In the past year or two, the U.S. stock market has risen one after another, driven by giant technology stocks such as Nvidia (NVDA.US), and capital markets such as the Japanese stock market have also performed strongly.
However, now that the AI boom has "subsided", coupled with the accumulation of capital profit-taking and high-level risk aversion, a large amount of funds will flow out of the capital markets such as US stocks and Japanese stocks to find depressions, while on the other side, China's economy is growing steadily and the stock market is still at a low level, so it will naturally become the primary choice for these funds.
Author: Yun Zhifeng Qi