On Monday (May 13, 2024), A-shares were weak throughout the day, and the market was relatively weak. A50 core assets fell more and rose less, Kweichow Moutai and CATL's two core heavyweights both fell about 2%, and the price of the leading broad-based A50 ETF Huabao (159596) fell 0.29% to 1.024 yuan, with a full-day turnover of 204 million yuan.
In terms of industry sectors, big finance struggled to protect the market, and the on-site price of bank ETF (512800) closed up 0.57% at 1.241 yuan against the market, continuing to brush a new high in the past two years! Brokerage ETF (512000) also successfully closed up, winning three consecutive gains on the daily line. As the market consolidated, funds continued to pour into high-dividend assets, and the S&P Dividend ETF (562060), a popular target with high dividends, rose for the 7th consecutive day!
Image source: Wind
In terms of Hong Kong stocks, the three major indexes collectively closed up today, brushing new highs together, of which the Hang Seng Index returned to 19,000 points after 9 months! The Internet sector continued to lead the leading position, and the price of the Hong Kong stock Internet ETF (513770), which is a leading Hong Kong stock Internet company, rose 2.5% on the market, hitting a new high in the year, and since late April, it has been 7 new highs in the year!
On the news side, three major events have sparked heated discussions in the market.
First, social finance in April was lower than expected. On May 11, the central bank released financial data for April, showing that the new social finance was -198.7 billion yuan, the first negative increase since 2005, a year-on-year decrease of 1.4 trillion yuan. Analysts believe that the poor performance of social finance in April is due to the slow issuance of government bonds and the weak drag of real estate on the one hand, and the prohibition of manual interest payments and the optimization and adjustment of the statistical method of added value in the financial industry.
Regarding the impact of this data on A-shares, the industry expects that the short-term A-share market will be under pressure, and the recovery of risk appetite may be disturbed. However, with the strengthening of the expectation of interest rate cuts and RRR cuts and the strengthening of fiscal expenditure, there is no need to be pessimistic about credit in the sense of total volume in the second half of the year.
Second, the Ministry of Finance announced the issuance arrangements for ultra-long-term special treasury bonds in 2024. According to the website of the Ministry of Finance, the types of ultra-long-term special treasury bonds involved are 20 years, 30 years, and 50 years, and it was decided to issue 30-year ultra-long-term special treasury bonds on May 17, 20-year ultra-long-term special treasury bonds on May 24, and 50-year ultra-long-term special treasury bonds on June 14. This year's government work report proposes that starting from this year, it is planned to issue ultra-long-term special treasury bonds for several consecutive years, which will be specially used for the implementation of major national strategies and security capacity building in key areas, and 1 trillion yuan will be issued this year.
The director of the National Development and Reform Commission said that ultra-long-term special treasury bonds can not only stimulate current investment and consumption, but also lay the foundation for long-term high-quality development. Market analysts believe that the issuance of special treasury bonds will help expand aggregate demand, optimize the supply structure, improve the efficiency of economic operation, increase the potential growth rate of China's economy, stabilize market expectations, and boost market confidence.
Third, from today, the real-time turnover of northbound funds will no longer be disclosed. According to the official announcement of the Hong Kong Stock Exchange, from May 13, the northbound fund disclosure mechanism will be adjusted, and the real-time purchase transaction amount, sell transaction amount and total transaction amount of northbound funds will no longer be announced. Some brokerages said that the northbound fund-related sectors in the APP will also be canceled.
For investors who are accustomed to watching the northbound capital trend in the intraday, it may be a little uncomfortable at first. However, in the medium to long term, this move may be conducive to the stability of the market. Brokerage analysts pointed out that the real-time disclosure of northbound funds will be stopped, but it can be disclosed at a time node or band, and the direction of relevant capital flows can be more refined. This not only ensures the rights and interests of investors to obtain information, but also better guides market expectations from the perspective of long-term capital flows.
【ETF All-Knowing Hot Spot Inventory】The following focuses on the trading and fundamentals of several thematic sectors of Hong Kong stocks, Internet, value, and healthcare.
1. [The Hang Seng Index and the Hang Seng Index are on the key level, what is the signal?] Hong Kong Internet ETF (513770) rose 2.5%, refreshing the new high of the year for 7 times since April! Has a long-term inflection point arrived? 】
Today's Hong Kong stock market first depressed and then rose, the three major indexes opened low and high to close in the red across the board, it is worth mentioning that the Hang Seng Index and the Hang Seng Index stood on the key level of 19,000 points and 4,000 points respectively, and the signal is of strong significance.
The Internet sector continued to lead the gains, and the price of the Hong Kong Internet ETF (513770), which is a leading Hong Kong stock Internet company, rose 2.5% on the market, once again refreshing a new high for the year. Since late April, the Hong Kong Internet ETF (513770) has had strong upward momentum, and has refreshed new highs for 7 times!
Image source: Wind
Since February, the Hong Kong Stock Connect Internet Index tracked by the Hong Kong Stock Internet ETF (513770) has soared by 45.40%, significantly outperforming the Hang Seng Index and the Hang Seng Technology Index by more than 22 and 13 percentage points, with outstanding elasticity advantages.
Image source: Wind
It is worth noting that Hong Kong stocks have gone from being pessimistic about falling for four consecutive years at the beginning of the year to rising for 10 consecutive days this month.
On the news side, it is rumored that domestic regulators are considering reducing the 20% income tax that mainland individual investors need to pay when they receive dividends and dividends when investing in Hong Kong-listed companies through the Hong Kong Stock Connect. Investment sentiment in the Hong Kong stock market has been boosted again.
According to the analysis, the valuation of Hong Kong stocks in the medium and long term is still at a low level, and the Fed's interest rate cut may catalyze further gains in Hong Kong stocks. Structurally, there is a focus on high dividends and technology internet leaders that are expanding their dividends.
The just-disclosed 2023 annual report shows that leading internet companies have generally increased their emphasis on shareholder returns, with Tencent Holdings, for example, having an overall shareholder return of more than 5% on buybacks and dividends.
It is worth noting that this week will usher in the peak period of the first quarter performance disclosure of Internet giants led by Tencent Holdings, and the overall market expectation is positive, with Tianfeng Securities predicting a net profit of about 41.8 billion yuan, a year-on-year increase of 28%.
The acceleration of the release of industry profits and the increase in shareholder returns have made Internet companies have stable performance and good cash flow, and the current pricing is more attractive, and there is room for improvement in valuation. Looking ahead, Guosen Securities clearly pointed out that the inflection point of the long-term fundamentals of the Internet of Hong Kong stocks has arrived, and the long-term recovery of the market can be expected.
(1) From the perspective of valuation, the Internet sector of Hong Kong stocks has still entered the deep value area, and the investment value is prominent compared with the valuation of the Nasdaq stock market in the United States. As of May 10, the price-to-earnings ratio of the CSI Hong Kong Stock Connect Internet Index, the underlying index of the Hong Kong Stock Internet ETF (513770), was 33.92 times, which was located at the 50.87% quantile of the index in the past 10 years.
(2) From the perspective of capital allocation: the active increase of long-term foreign funds has driven the inflow of southbound funds, which is expected to continue to promote the rise. As of last Friday, 54 of the 55 trading days since February 7 were net purchases, with a total increase of HK $210.5 billion.
(3) In terms of the company's operation and returns: since the beginning of the year, the Internet leader has reduced costs and increased efficiency, and the fundamentals have continued to improve. In 2023, Tencent Holdings achieved significant growth in gross profit and net profit for four consecutive quarters, showing a V-shaped recovery in fundamentals.
(4) Domestic economic policy: Recently, the real estate policy has continued to loosen, the monetary interest rate policy has been further relaxed, and the domestic economy as a whole is still in the stage of economic recovery, and policy support has continued to be launched, which is expected to continue to support demand.
In terms of layout tools, the Hong Kong Stock Internet ETF (513770) tracks the CSI Hong Kong Stock Connect Internet Index (931637), and the weighted stocks bring together Tencent Holdings, Meituan, Xiaomi Group, Kuaishou and other leading companies in different Internet segments, among which Tencent Holdings, Meituan, Xiaomi Group, Kuaishou, and JD Health have a weight of nearly 70%, and the top ten constituent shares have a weight of more than 80%, with outstanding leading attributes.
2. [High dividends rise up to protect the disk! ] Value ETF (510030) closed in the red against the market, and the closing price continued to hit a new high in the past 9 months! Agency: Optimism in the bud]
As of the close, the value ETF (510030), which is a large-cap blue-chip stock with "high dividends + low valuation", closed up 0.12% against the market, and closed in the red on the daily line, and the closing price continued to hit a new high in the past 9 months.
Image Credit: Snowball
In terms of constituent stocks, COSCO Shipping Holdings soared 5.39%, leading the sector, CRRC rose 4.6%, and China Chemical, China Merchants Shipping, and Huadian International closed up more than 3%. In terms of decline, Yankuang Energy and Shaanxi Coal closed down more than 2%, dragging down the trend of the sector.
Image source: Wind
On the news side, on May 11, the National Bureau of Statistics announced CPI, PPI and other data for April 2024. CITIC Securities pointed out that China's CPI and PPI rebounded slightly year-on-year in April, and the period of the greatest pressure on low prices during the year may have passed. It is expected that the follow-up CPI will still maintain a trend of "moderate recovery and small upward steps", and the CPI will have to wait until after August to rebound to more than 1%.
At present, multiple factors may help the subsequent trend of the 180 Value Index:
[Foreign capital is optimistic]
Recently, a number of foreign-funded institutions said that at present, global funds are actively looking for more cost-effective assets, and Chinese assets are regarded as a value depression that cannot be ignored - China's economy continues to recover well, asset valuation adjustment is sufficient, and the cost performance is highlighted, and the relevant departments continue to promote the opening up of China's capital market, or will further enhance the attractiveness of A-shares and Hong Kong stocks to global funds.
[The valuation of the 180 value index is still at a low level]
At present, the valuation of the 180 Value Index, the underlying index of the value ETF (510030), is still at a low level. Wind data shows that as of the close of the last trading day (May 10), the price-to-book ratio of the 180 Value Index was 0.82 times, which was at the low level of 22.99% quantile in the past 10 years, and the cost performance of medium and long-term allocation was highlighted.
Image source: Wind
Looking ahead, CITIC Securities said that the macro policy environment continues to improve, many positive factors are accumulating, and all kinds of funds are rushing to promote the comprehensive repair of China's assets in the near future, and optimism is budding. It is suggested to dilute the game and focus on the three main lines of high-performance growth, low-volatility dividends and active themes.
Value investing, choose "value"! The value ETF (510030) closely tracks the SSE 180 Value Index, which takes the SSE 180 Index as the sample space, and selects 60 stocks with the highest value factor scores as sample stocks, covering 26 "Zhongzitou" stocks! The constituent stocks of the SSE 180 Value Index are all large-cap blue-chip stocks with "low valuation + high dividends", including leading stocks in the financial sector such as Ping An of China, China Merchants Bank, and Industrial and Commercial Bank of China, as well as leading stocks in the infrastructure and resources sectors.
3. [Overseas news!] The long-short divergence appeared, WuXi AppTec opened high and went low, and closed up 2.99% against the market! Healthcare ETF (512170) premium widens in the afternoon]
Friends who pay attention to the medical sector know that since the beginning of the year, the US Biosafety Act (i.e., the bill restricting WuXi AppTec and Chinese biotech companies) has had a significant impact on the stock price of WuXi Thes. What is the reason for the collective gap of AH WuXi stocks today? That's right, it's the bill again.
On May 10, local time, the U.S. Congress issued a revised version of the Biosecurity Act, which extends the exemption of existing contracts/products to January 1, 2032 (that is, requiring U.S. companies to end their cooperation with these companies by 2032). Some people in the industry believe that 8 years is enough time for relevant companies to adapt, and the landing of this biggest uncertainty may have a positive impact on related companies.
However, some market participants believe that although there is a respite, this will also lead to a more practical bill, and the long-term development pressure of the domestic pharmaceutical industry may increase.
The intraday divergence of views intensified, and WuXi Department dived. As of the close, A-share WuXi AppTec closed up 2.99%, with an amplitude of 6.44% throughout the day.
Judging from the overall market of the medical sector, the constituent stocks fell more than they rose, so that the medical ETF (512170) finally closed slightly lower. However, the premium widened in the afternoon, and the closing premium rate still reached 0.26%, indicating that the buying funds were relatively strong, and the bulls may begin to exert force.
Image source: Wind
In the long run, there has been a round of short-term market in the medical sector recently. Last week (May 6-10), the medical ETF (512170) closed out three consecutive positives, and the underlying index CSI Medical has risen by 10.57% in the past three weeks, significantly exceeding the performance of the Shanghai Index (2.91%) and the CSI 300 (3.52%) in the same period.
Image source: Wind
CMBI stated in the "CMB International China Pharmaceutical: Industry Support Policies are Expected to Follow, Performance Recovery is Expected" that the pharmaceutical industry may continue to rebound, mainly due to: 1) the expected improvement of domestic policies, the implementation of medical equipment renewal policies to effectively stimulate procurement demand, the improvement of the payment environment for innovative products by medical insurance, and the continuous recovery of in-hospital medical demand after the normalization of anti-corruption; 2) Going overseas provides additional growth momentum, innovative drugs are expected to continue to land overseas, and innovative medical devices are expected to expand overseas markets; 3) GLP-1, ADC and other long-term investment opportunities; 4) Sector valuations are attractive, with the dynamic P/E ratios of most leading stocks being 1 standard deviation lower than the historical average, and the dividend yields of some individual stocks being attractive.
It should be reminded that the adjustment time of the pharmaceutical and medical sector is long, and the short-term market recovery does not represent a complete reversal of the market.
The pictures and data in this article come from the Shanghai and Shenzhen Stock Exchanges and Huabao Fund. Risk Warning: Hong Kong Stock Internet ETF passively tracks the CSI Hong Kong Stock Connect Internet Index. The index has a base date of 2016.12.30 and was released on 2021.1.11, a value ETF passively tracking the SSE 180 Value Index with a base date of 2002.6.28 and a release date of 2009.1.9, and a healthcare ETF (512170) and its feeder fund passively tracking the CSI Healthcare Index with a base date of 2004.12.31 and a release date of 2014.10.31. The annual performance of CSI Healthcare Index from 2019 to 2023 will be 48.67%, 79.67%, -14.71%, -25.1%, and -24.25% respectively. The composition of the index constituents is adjusted in accordance with the rules of the index, and its backtested historical performance is not indicative of the future performance of the index. The individual stocks mentioned in the article are only objectively displayed and enumerated as index constituent stocks, and are not recommended as any individual stocks, and do not represent the fund manager and fund investment direction. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, any form of expression, etc.) is for reference only, and investors shall be responsible for any investment behavior determined independently. In addition, any opinions, analysis and forecasts in this article do not constitute any form of investment advice to the reader, and the company shall not be liable for any direct or indirect losses arising from the use of the content of this article. Investors should carefully read the Fund Contract, Prospectus, Fund Product Key Facts Statement and other legal documents of the fund, understand the risk-return characteristics of the fund, and choose products that are suitable for their own risk tolerance. Past performance of a fund is not indicative of its future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of the performance of the fund. According to the fund manager's assessment, the risk level of A50 ETF Huabao and its feeder funds, bank ETFs, brokerage ETFs, S&P dividend ETFs, value ETFs, and medical ETFs are all R3-medium risk, and are suitable for investors with balanced (C3) and above. The risk level of Hong Kong stock Internet ETF and medical ETF feeder fund is R4-medium and high-risk, which is suitable for active (C4) and above investors. Investors should pay attention to the suitability opinions issued by the fund managers in a timely manner when the distribution agencies (including fund managers, direct sales agencies and other sales agencies) conduct risk assessments of the above funds in accordance with relevant laws and regulations, and the opinions of each sales agency on the suitability are not necessarily the same, and the risk rating evaluation results of fund products issued by fund distribution agencies shall not be lower than the risk rating evaluation results made by fund managers. The risk-return characteristics of the fund and the risk level of the fund in the fund contract are different due to different factors to be considered. Investors should understand the risk and return of the fund, carefully select fund products based on their own investment objectives, horizon, investment experience and risk tolerance, and bear their own risks. The registration of the above funds by the China Securities Regulatory Commission does not indicate that it has made substantive judgments or guarantees on the investment value, market prospects and returns of the funds. Caution should be exercised when investing in funds.
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