Recently, the Hang Seng Index achieved ten consecutive gains, setting a record for the longest consecutive gains since 2018.
"Bitter cauliflower also has spring", when it comes to the recent Hong Kong stock market, some institutional people sighed, "The spring of Hong Kong stocks is coming." ”
What makes Hong Kong stocks the best performing market in the world in the short term? The interviewed brokerages generally believe that the internal and external resonance has led to the strong performance of Hong Kong stocks, Hong Kong stocks are empty, the stability of the RMB exchange rate is significantly better than that of other countries in the Asia-Pacific region, the valuation of RMB assets is at a relatively low level, the cost-effective advantage has begun to appear, and the stable exchange rate of RMB has further enhanced the allocation value of Hong Kong stocks, and a large number of overseas funds have taken the opportunity to return to the country. At the same time, the expectation of continued improvement in China's economy has further strengthened the confidence of various funds to buy Chinese assets.
With the reduction of uncertainty in China's economic and policy fields, Hong Kong stocks still have room for growth and growth. This year's rally in the Hong Kong stock market has just begun. From the perspective of investment strategy, high dividends and high-quality technology, medicine and other stocks in the Hong Kong stock market can be used as the focus of allocation.
In order to take the pulse of the turmoil of Hong Kong stocks, Brokerage China interviewed the chief analysts of the strategy of the four major brokerages, namely Zhang Yidong, the global chief strategy analyst of Industrial Securities (601377), Fang Yi, the chief strategy analyst of Guotai Junan (601211) Securities, Fu Jingtao, the chief analyst of research strategy of Shenwan Hongyuan (000166), and Chen Guo and He Sheng of the strategy team of China Securities Construction Investment (601066).
Overseas funds repatriated to Hong Kong stocks
"At present, Hong Kong stocks have basically overdrawn all the negative factors, so a little sunshine can shine." Zhang Yidong said that the current U.S. bond yields continue to fluctuate at high levels, suppressing the performance of stock markets such as the United States and Japan, but it has not caused the market to worry about systemic risks.
Fang Yi also said in an interview with a brokerage China reporter that the reduction of uncertainty is the most critical driving force for the rebound of the Hong Kong stock market.
"The higher earnings growth level of high-quality companies in Hong Kong stocks has not changed much in the past three years, what has changed is the awareness and acceptance of risks and uncertainties by investors. After three years of adjustment, the valuation quantile of the Hang Seng TECH Index was only 4.4% in mid-April, which is historically rare, and the depressed valuation level implies that the market has priced in various uncertainties and risk factors. Fang Yi said.
Changes in China's macroeconomic fundamentals have also supported the upside of Hong Kong stocks.
Zhang Yidong said that the current risk premium of Chinese assets is too high, reflecting overly pessimistic expectations. In fact, both in the fourth quarter of last year and in the first quarter of this year, China's macroeconomic data far exceeded market expectations.
"It has been proven that China's economy is still very resilient. China's economy has performed much better than the pessimistic expectations since last year. As a result, China's high-quality assets, which have undergone deep adjustments, have recently led Hong Kong stocks to continue to rise sharply. Zhang Yidong said.
Fang Yi also said: "Since the beginning of this year, we have also seen the better-than-expected performance of China's economy, more proactive macro policies, a number of capital market reform measures, and the normalization of platform economy supervision. As a result, when uncertainty subsides, the visibility of expected returns on high-quality assets becomes clearer, and market participants' acceptance of risky assets increases. ”
Liquidity has also become an important support for the Hong Kong stock market. Chen Guo and He Sheng said in an interview with a brokerage China reporter that this round of capital inflow was led by domestic capital, and the cumulative net purchase of Hong Kong Stock Connect rose from 2,530.1 billion yuan on February 19 to 2,706.5 billion yuan on May 6. After April 11, foreign capital flowed into Hong Kong stocks sharply, and the Hong Kong dollar appreciated against the US dollar under the inflow of foreign capital during the same period.
The follow-up market is worth looking forward to
The continuous rise of Hong Kong stocks this time has made many market participants worry about whether this time is a "flash in the pan"?
Fu Jingtao said that the rebound of Hong Kong stocks is different from before.
"The big difference this time is that the favorable window is gradually approaching." Fu Jingtao said that the Fed's medium-term easing is still the direction. At the same time, the fundamentals of Hong Kong stocks and A-shares are bottoming out simultaneously, and in 2025, domestic and overseas resonance stimulus, supply pressure will be significantly eased, and the profitability of Hong Kong stocks and A-shares may rebound. In addition, the spread of A-share high-dividend investment to Hong Kong stocks, and the revaluation of high dividends is a medium-term trend, which will further strengthen the perception of the margin of safety of Hong Kong stocks.
"Time is a friend of Hong Kong stocks, and you can be more patient with holding Hong Kong stocks this time." Fu Jingtao said.
Zhang Yidong expressed this optimism more directly. He said: "This year's Hong Kong stock market is at least quarterly, or even annual, and the rise has just begun. ”
Zhang Yidong said frankly that compared with the many rebounds in the past few years, the risk premium, fundamentals and policy improvements of Hong Kong stocks are more sustainable. He said that with the improvement of China's macro expectations, overseas incremental funds are expected to continue to flow in, rather than just a "one-shot deal" short-term game.
At the same time, China's economy and the fundamentals of leading companies will continue to improve in the second half of the year. As China's economy stabilizes, the consensus expectation for the Hang Seng Index's earnings growth rate will be revised upward. In addition, with such low earnings growth consensus expectations, the current forward P/E ratio is also at an all-time low. With valuations at extremely low levels, more long funds will increase their holdings of Hong Kong stocks once the macroeconomic data exceeds expectations. In the third quarter, there may be more "data-watching" long-only foreign investors to increase their positions in the Chinese stock market.
In addition, China's micro stock market environment will also improve significantly compared to the past few years. A-shares emphasize the development of a safe, transparent, standardized, open, dynamic and resilient capital market, and have introduced many very meaningful policy guidelines, such as the new "National Nine Measures", to encourage investment and limit excessive financing, including encouraging dividends. As far as Hong Kong stocks are concerned, Hong Kong is striving to improve the competitiveness of the stock market, and the five measures of the China Securities Regulatory Commission for Hong Kong cooperation will also be a positive impetus in the second half of the year.
"With the in-depth progress of the Stock Connect mechanism, it will be worth looking forward to the future of the Greater Bay Area Wealth Management Connect, and it is also worth looking forward to whether the tax policy for Chinese investors to invest in Hong Kong stocks through Hong Kong Stock Connect can refer to A-shares in the future?" Zhang Yidong said that Hong Kong stocks in 2024 are bullish markets, and from the analysis of fundamentals and capital, the highs are expected to reach or even exceed the highs in 2023. Taking the current Hang Seng Index as an example, there is still about 20% of the space to look forward to.
Fang Yi said that it is normal for Hong Kong stocks to have certain divergences and shocks after the recent sharp rise. With the reduction of uncertainty in China's economic and policy areas, Hong Kong stocks still have room to rise.
"The market needs to reassess the positive impact of the reduction in uncertainty on the valuation of the Hong Kong equity market." Fang Yi said that in addition to China's better-than-expected economic performance in 2024 and more proactive macro policies, in terms of industry supervision, many ministries and commissions in 2024 have made it clear that "more policies conducive to stabilizing expectations, stabilizing growth and stabilizing employment, and prudently introducing contractionary and inhibitory measures", the regulatory orientation of the platform economy is undergoing more positive changes, and the process of shrinking policies and valuations and declining risk appetite has ended. After the uncertainty decreases, the visibility of the expected return of high-quality assets of Hong Kong stocks increases, and the value of allocation increases.
At the same time, Fang Yi introduced that during the period of increased currency volatility in external emerging markets, the relative stability of the RMB and the Hong Kong dollar linked exchange rate system provided a safe haven for global investors. The lower exchange rate pressure on the Hong Kong dollar relative to other regions, the lower valuation level and the more stable currency value have made the global allocation of the Hong Kong stock market more attractive, and it is true that overseas investors are becoming more active in overweight the Chinese market.
However, the risk of a short-term market correction is also worth paying attention to. Zhang Yidong said frankly that under the suppression of the bear market thinking of Hong Kong stocks in the past few years, the improvement of risk appetite of Hong Kong stocks will not be achieved overnight. Judging from the rhythm of the market from historical experience, whenever the Hong Kong stock market is active, when mainland buyers and sellers are unanimously bullish, the Hong Kong stock market will fluctuate. In addition, from the late second quarter to the beginning of the third quarter, the short-term behavior pattern of overseas funds may need to be careful, and it may shift from the current switch mode of high assets to low assets to the hedging mode.
Fu Jingtao said: "After the short-term rebound of Hong Kong stocks, there will inevitably be twists and turns, and better opportunities are in the second half of 2024 and 2025." ”
Assets such as high dividends are in the spotlight
For how to invest in the current Hong Kong stock market, institutional people have also put forward their own suggestions.
"Southbound investors are currently investing in the Hong Kong stock market mainly to adopt a dividend strategy, and funds have gradually spilled over to the technology sector in the past month, with the media industry dominated by Internet companies accounting for 9.9% of the net inflow of Hong Kong Stock Connect in the past month, and the allocation part has begun to turn to the leading technology stocks that have improved the economy. Foreign capital has always preferred Internet companies, and this round of replenishment is more balanced than the previous allocation, with Alibaba, JD.com, and Xiaomi increasing their positions in the technology and network sectors, and also allocating in energy, finance and other sectors. Chen Guo and He Sheng told reporters about the analysis of brokerage China.
Zhang Yidong suggested that investors should adopt the strategic idea of investing in the Hong Kong stock market now, that is, based on earning money from the performance growth of listed companies, be friends of time, actively take high-win assets as the bottom position, and continue to increase their holdings by using shocks.
He said that the investment in Hong Kong stocks with a high winning rate can focus on two types of assets. One category is high-dividend assets. It can be allocated according to the idea of convertible bonds, with a dividend yield of about 3% or a repo yield of about 1%, which does not have to be too harsh, and it is necessary to pay attention to the cash flow statement and pay attention to good cash flow to support the sustainability of dividends or repurchases. However, this year, the focus on performance resilience is higher, and the performance growth rate needs to reach more than 10%, so that the comprehensive return will be more than 15%. The high-dividend assets of Hong Kong stocks, especially some central enterprise Hong Kong stocks, continue to be strongly bullish.
The other category is high-quality profitable assets, and this year we should look for core assets with era dividends from three dimensions. The first is the leading companies in the fields of Internet, biomedicine, food and beverage, property and social services, and they are the most optimistic about the Internet leaders. The second is the king of manufacturing related to going overseas, especially power tools, furniture, home furnishing, machinery, chemicals, etc. The third is high-end manufacturing, especially those companies that may benefit from the country's new round of large-scale investment in equipment renewal.
This article was first published on WeChat: Brokerage China. The content of the article belongs to the author's personal views and does not represent the position of Hexun.com. Investors should act accordingly at their own risk.