Looking forward to the mainland's plan to exempt Hong Kong stocks from dividend tax, Hong Kong stocks continued to rise on the 10th.
The Hang Seng Index soared more than 400 points, approaching the 19,000-point mark, and the main board turnover was 171 billion yuan, up 38% from the previous day, hitting a 10-month high. The net inflow of Beishui was 6.5 billion yuan.
The Hang Seng Index rose 488 points for the whole week, rising for 3 consecutive weeks; The HSCEI rose 2.62%; The index edged down 0.2%.
Analysts generally believe that if the mainland waives the dividend tax of Hong Kong Stock Connect, it will be good for the investment sentiment of Hong Kong stocks, and it is expected to push up the average daily trading volume of Hong Kong stocks, and the Hang Seng Index is expected to rise above 20,000 points.
The Hang Seng Index opened 131 points higher on the 10th to 18,669 points, up 455 points at most, and had reached a high of 18,993 points, refreshing the high of nearly 9 months since August 11 last year, rising 425 points or 2.3% to 18,963 points throughout the day; The HSCEI rose 2.4% to 6,718 points; The tech index rose 14 points, or 0.4%, to 3,962.
For the whole week, the Hang Seng Index rose by 487 points or 2.6%, and rose for three consecutive weeks, soaring by 2,739 points or 16.9%; After rising for two weeks, the tech index fell 0.2% this week; The HSCEI rose 2.62%.
Source: China News Agency
Pang Baolin, managing director of Dongji Fund Management, believes that the current trend of Hong Kong stocks is close to that of 2003 and has entered the "bull one" stage, which means that the bottom has been seen and the valuation is continuing to repair. He pointed out that it will first be reflected in heavy blue chip stocks, and then transmitted to technology stocks, as well as second- and third-tier stocks. He also pointed out that once Hong Kong stocks break through 19,000 points, there may be a round of adjustment, and it is not a problem to further rise to 20,000 points.
Huang Weihao, executive director of the research department of Zhongwei Securities, pointed out that in just over 10 days, Hong Kong stocks have risen by more than 2,000 points, which is quite exaggerated, but the main reason for the rise is stimulated by the news, and the specific policies have not been implemented, so it is difficult for the Hang Seng Index to rise again.
The news spurred capital inflows into Hong Kong
In terms of key sectors, the Hong Kong Stock Exchange (388) closed up 7.6%, the largest blue chip gainer, on rumors that the mainland would be exempted from dividend tax on Hong Kong Stock Connect.
Sought after by funds, large financial stocks, telecommunications stocks, coal stocks, power stocks, water stocks, etc. are among the top gainers; Among them, domestic bank stocks performed outstandingly, with CCB (939) soaring 6.8%, Postal Savings Bank (1658) rising 6.18%, China Merchants Bank (3968) rising 4.56%, ICBC (1398) rising 4.1%, and Bank of China (3988) rising 3.3%. Domestic insurance stocks also performed very well, with China Life (2628) up 4.9%, Ping Bao (2318) up 5.8%, and CPIC (2601) up 8.14%.
Pang Baolin believes that H-shares are currently cheaper than mainland A-shares, and if the market-rumored dividend tax reduction and exemption policies can be implemented, it is believed that for mainland investors, the attraction is expected to surpass that of A-shares, further stimulating capital inflows into Hong Kong.
He said that high-dividend stocks such as power stocks, benefiting from the economic recovery this year, the resumption of industrial activities, and the increase in demand for electric vehicles, some interest rate returns rose to 6 to 7%, and the stock price jumped 5% to 6%, together with dividends, the return by the end of the year has been as high as 20%, while the mainland interest rate is falling, and the market is crazy about it is reasonable.
Domestic real estate stocks speculated on electric vehicle stocks under pressure
Source: China News Agency
The relaxation of purchase restrictions in the mainland property market has accelerated, and domestic real estate stocks have speculated.
Shimao (813) rose 91% to close at 0.96 yuan, up 60%; Ocean (3377) 14.9%; CIFI (884) surged 11.1%; Agile (3383) has a bullet height of 13.6%; Sunac (1918) rebounded 7.6%; Longfor (960) rose 5.4%; China Resources Land (1109) soared 7.2%; China Overseas (688) rose 4.6%; Vanke (2202) rose 5.7%.
On the other hand, the United States reportedly intends to impose tariffs on key industries such as electric vehicles on the mainland, and electric vehicle stocks have been under pressure. BYD (1211) fell 1.1%, NIO (9866) fell 2%, Li Auto (2015) fell 1.6%, and Xpeng (9868) fell 0.2%; Geely's (175) electric vehicle brand Zeekr will soon be listed on the New York Stock Exchange, and Geely edged up 0.2% on the day.
Foreign capital has risen sharply, and Hong Kong stocks have been allocated to the AI sector
BOCOM International issued a report saying that the bank selected five major foreign securities firms to calculate the specific position changes of the five major foreign securities firms in the past month (late March to early May) based on their Hong Kong stock holdings of more than HK $6.4 trillion.
The bank found that foreign investors did increase their holdings, but only slightly on a net basis. In addition, foreign investment in AI-related software and hardware sectors has increased significantly, with the IT sector increasing the most.
BOCOM International explained that since April, Hong Kong stocks have continued to rebound, and the market seems to have a consensus that the largest buyer on the margin is foreign capital, but the data is limited, and it is difficult to quantitatively analyze whether foreign capital is increasing its holdings.
The Hong Kong stock market lacks a rigorous definition of foreign capital, so the bank tries to judge the capital trend of foreign capital in Hong Kong stocks from the specific position data of Hong Kong stock brokers.
Internet stocks are cost-effective
The bank said that AI and bulk are still important starting points for sector allocation this year, especially Internet-related, which is particularly cost-effective.
In addition, the value of the financial real estate sector has increased significantly, especially in the real estate industry, after the obvious change in policy orientation, the allocation value of leading targets with high-quality land reserves, financing costs and smooth channels is still prominent.
The report also pointed out that foreign investors' sentiment towards the large consumption sector has been repaired, the medical sector is still reducing holdings, and the financial real estate sector is still cautious.
For the large consumption sector and the medical sector, the bank suggests that the allocation needs to be selected from the bottom up, especially the medical sector, which is likely to have high-quality targets that are wrongly killed in the reduction of foreign investment.
If the dividend tax reduction of Hong Kong Stock Connect is implemented
CICC: Boost investment in high-dividend sectors
It is rumoured that the China Securities Regulatory Commission (CSRC) and the State Administration of Taxation (SAT) are considering exempting mainland individual investors from the 20% dividend tax paid on dividends when they hold Hong Kong stocks through the Stock Connect.
According to a research report released by CICC, if the dividend tax reduction and exemption of Hong Kong Stock Connect is implemented, it is expected to further boost the investment enthusiasm of mainland investors in Hong Kong stocks, especially in the related sectors of high dividends (high dividends), which will boost sentiment in the short term and help improve the liquidity of the Hong Kong stock market in the long run.
The tax cut is expected to narrow the AH spread
In the past three years, the cumulative total dividends of all Hong Kong Stock Connect voting targets have averaged about 1.8 trillion yuan per year, and then calculate the proportion of each stock held in Hong Kong Stock Connect and the 20% Hong Kong Stock Connect dividend tax standard, and estimate that the total dividend tax collected by Hong Kong Stock Connect is about 45 billion yuan per year.
CICC mentioned that assuming that mainland individual investors account for about 25% of their investment in Hong Kong Stock Connect, it is expected that the direct tax reduction brought by this potential adjustment will be about 10 billion yuan per year. However, considering that the average daily turnover of the main board of the Hong Kong stock market since the beginning of this year is about 100 billion yuan, the short-term direct reduction brought by this potential adjustment may be limited, but it may bring a boost to sentiment.
CICC believes that in the medium and long term, it will help boost the attractiveness of high-dividend assets of Hong Kong stocks, improve the liquidity of Hong Kong stocks, and even help the convergence of AH premiums of some companies.
CICC added that even if the current 20% dividend tax rate for Hong Kong Stock Connect is taken into account, the dividend yield of Hong Kong stocks of most companies is still more attractive. To a certain extent, this also explains why mainland southbound funds have continued to favor Hong Kong stocks with high dividend targets and sectors in the past year.
Lyon: If the tax cut helps the valuation of H-shares recover
In addition, CLSA and UBS also issued reports on this, believing that the stock price of the Hong Kong Stock Exchange will be boosted to a certain extent. CLSA reported that such tax breaks could help H-share valuations recover and boost the overall average daily turnover of Hong Kong stocks to the smallest mid-single-digit growth.
The bank is bullish on the Hong Kong Stock Exchange and reminds investors to be aware of the risk of short-term overcorrection of the Hong Kong Stock Exchange, but the recovery of the average daily trading trend, favorable capital flows and policy tailwinds may also indicate further gains. CLSA maintains HKEX's "Buy" investment rating and gives a target price of $285.
Source: China News Agency
According to the UBS report, if the authorities take the avoidance of double taxation as the primary consideration, the dividend tax relief arrangement will apply to both individual investors and securities investment funds.
At present, mainland corporate investors, including domestic insurance, who hold shares for more than 12 months have been exempted from the dividend tax of Southbound Connect.
According to the analysis of the report, once the tax reduction is implemented, the actual dividend yield of the shares in the Hong Kong Stock Connect can be increased by 1% to about 5%, which is estimated to bring about 4% of the additional trading volume, which is equivalent to bringing 2% additional income to the Hong Kong Stock Exchange. UBS maintains HKEX's "neutral" investment rating and gives a target price of $262.