The volume has risen for three consecutive days, and the bull market of Hong Kong stocks has returned? !
Yesterday (13th), the Hang Seng Index broke through 19,000 points to close at 19,115.06 points, up 151.38 points, which was the first time since August last year, that the market turnover reached 147.2 billion yuan.
According to market analysis, the short-term will continue to show an "overbought and overbought" pattern, and the Hang Seng Index is expected to reach a high of 20,000 points in the future.
Yesterday morning, the Hang Seng Index fell nearly 140 points, as low as 18,827 points, and then turned from a decline to rise, closing up 0.8%, standing at the 19,000-point mark. The index outperformed the market, closing at 4018.69 points, up 56 points or 1.42%; The HSCEI closed at 6,761.64 points, up 42 points or 0.64%. In terms of technical trends, the Hang Seng Index 9-day Relative Strength Index (9RSI) was reported at 82.27, which is in the overbought area, and the pressure on the pullback is gradually increasing.
ATM leads the market, and gambling stocks soar
On the same day, ATMs led the market, with Tencent Holdings, Alibaba and Meituan Dianping contributing a total of 125 points to the Hang Seng Index. Among them, Tencent announced its first quarter results today (14th) on the eve of its stock price and closed at 378.2 yuan yesterday, up 1.94%; Alibaba, which also announced its annual results today, closed at 81.15 yuan, up 4.11%; Meituan Dianping closed at 122.3 yuan, up 3.12%. In terms of other technology stocks, Bilibili (9626) closed at 114.9 yuan, soaring 4.09%; Zhihu (2390) closed at 10.28 yuan, up 4.3%.
As the central government announced the addition of eight mainland cities for free travel to Hong Kong and Macao, retail, catering, hotel and airline stocks all did well. Among them, Sa Sa International (178) soared 5% to close at 0.84 yuan, and Lukfook Group (590) rose 0.73% to close at 19.28 yuan. Grand Hotel (045) rose 3.9% to close at 6.39 yuan, and Miramar Hotel (071) rose 1.4% to close at 10.16 yuan. Cathay Pacific Airways (293) rose 1.85% to close at 8.8 yuan, while Air China (753) rose 1.48% to close at 4.12 yuan.
In addition, Xia Baolong, director of the Hong Kong and Macao Affairs Office of the Central Committee, arrived in Macao yesterday to start a seven-day inspection trip, and gambling stocks are also soaring. SJM Holdings (880) soared 8.62% to close at 3.15 yuan, Wynn Macau (1128) soared 5.13% to close at 8.4 yuan, and MGM China (2282) rose 4.66% to close at 15.26 yuan. The central urban area of Guangzhou put forward two sets of tap water price adjustment plans, water stocks yesterday to see speculation, Guangdong Investment (270) rose 2.83%, closing at 4.73 yuan.
Beishui has become a pioneer and foreign capital has flowed into the country significantly
For the continuous upward trend of the market in recent months, BOCOM International said that Hong Kong stocks have continued to rebound since April, and the largest buyers are foreign brokers. In fact, from the end of March to the beginning of May, there was a gradual small net increase in foreign investment; In particular, their allocation in AI-related software and hardware industries has seen a significant increase.
China Securities Construction Investment said that the core reason for the recent strong rise in Hong Kong stocks is the improvement of the capital side. In this round of rise, southbound funds played a leading role, which continued to flow in since February, and gradually spread from the dividend sector to other sectors; After April 11, foreign capital flowed into Hong Kong stocks sharply, and together with domestic capital, Hong Kong stocks rose strongly.
Ye Shangzhi, chief strategic analyst of First Shanghai, pointed out that the market rumors that the dividend tax of Hong Kong Stock Connect is expected to be reduced, or the reason for stimulating funds, especially Beishui, to accelerate the inflow of Hong Kong stocks. The repatriation of funds and the improvement and enhancement of liquidity have been the catalyst for the recent recovery in the valuation of Hong Kong stocks.
Looking ahead, Tan Zhile, senior strategist of Futu Securities, said that the valuation of the Hang Seng Index at the current level is not quite high, and the market outlook can adopt the strategy of "rising the market without valuation", and it is expected that the market is expected to test 20,000 points and support 19,000 points. China Securities Construction Investment believes that the current round of gains in Hong Kong stocks is expected to continue, and will gradually switch from the Hang Seng Technology Index to the high-dividend sector. In the future, the pricing power of southbound funds is expected to be greatly increased, replacing the style of foreign capital dominating Hong Kong stocks. This year, the main line of Hong Kong stock allocation is still the dividend sector, and the technology grid sector can pay attention to the leading stocks that have improved the economy.
【Institutional Perspectives】
The exemption of Hong Kong Stock Connect dividend tax will stimulate the bullish movement of Hong Kong stocks
In response to the market rumors last week that the mainland intends to waive the dividend tax of Hong Kong Stock Connect, the big banks generally expect that the implementation will be beneficial to the average daily trading volume and turnover of Hong Kong stocks, and will attract more funds to flow into Hong Kong-listed Chinese telecommunications stocks.
More funds are expected to flow into Chinese telecom stocks
Goldman Sachs issued a report saying that the stock price of the Hong Kong Stock Exchange (388) closed up 7% on Friday, driven by the news that the mainland intends to exempt Hong Kong stocks from dividend tax. Although the bank did not comment on the outcome, it proposed an upside scenario – i.e., if the tailwinds are implemented, the trading volume of the Southbound Trading may rise. The bank expects that the average daily turnover of Hong Kong stocks will stabilize in fiscal 2024, with an average annual compound growth rate of about 12% from fiscal year 2024 to 2026. As market valuations are trending upward, it is also likely to drive the number of IPOs, which in turn will contribute to market volume and HKEX share prices. At present, the bank's target price for the Hong Kong Stock Exchange is 330 yuan.
JPMorgan Chase & Co. also published a research report pointing out that if the relevant policies are implemented, it is expected that more funds will flow into Hong Kong-listed Chinese telecommunications stocks, because the dividend return of these shares is relatively high, with a dividend yield of about 8% and an average annual compound growth rate of more than 10% per share, which is very attractive. The bank maintained an "overweight" rating on Chinese telecom stocks. In fact, after the news came out last Friday, Chinese telecom stocks rose immediately. JPMorgan pointed out that after last Friday's rebound, the H-share share price of Chinese telecom stocks is still at a discount of more than 30% to A-shares, and Unicom (762) H-shares have the largest discount to A-shares, which is expected to be the biggest beneficiary of this benefit. The bank is optimistic about China Unicom in the short term, and China Mobile (941) in the long term.
The United States may cut interest rates as soon as the second half of the year
In addition, Wu Meiyan, director of fixed income investment at Schroder Investments, said that the bank maintained its expectation that the United States would have a chance to cut interest rates as soon as the second half of this year, and predicted that the U.S. economy had a six-to-seven-percent chance of achieving a "soft landing". This year, the main factors influencing the global bond market will continue to focus on inflation expectations and monetary policy adjustments. Investors should also be concerned about the financial market noise ahead of the US presidential and congressional elections. Although the above factors will not directly affect the Fed's monetary policy, there is a chance that the overall volatility of the bond market will increase before the election.
On the first anniversary of the launch of Swap Connect, there are three ways to further optimize
Since the launch of Swap Connect in May last year, the trading and clearing mechanisms have been running smoothly, with the active participation of domestic and foreign investors, and the business volume has continued to rise. Nearly one year on the anniversary of the implementation, the People's Bank of China, the Hong Kong Monetary Authority and the Hong Kong Securities and Futures Commission jointly announced yesterday that they support further enhancements to the Swap Connect mechanism.
The first is to enrich the product types, and will launch interest rate swap contracts with the settlement date of the international money market as the payment cycle, which is in line with the international mainstream trading varieties to meet the diversified risk management needs of investors.
The second is to improve the supporting functions, launch contract compression services and supporting historical value contracts, so as to facilitate participating institutions to manage the business scale of duration contracts, reduce capital occupation, and activate market transactions.
In addition, the National Interbank Funding Center, the National Interbank Market Clearing House Co., Ltd., and the OTC Clearing Company Limited will simultaneously introduce other system optimizations and preferential measures to reduce the cost of investors' business participation.
In the next step, the regulators of the Mainland and Hong Kong will guide the financial market infrastructure institutions of the two places to continue to promote the cooperation of Swap Connect in a prudent and orderly manner, and continue to improve various mechanisms and arrangements, so as to help steadily expand the opening-up of China's financial market and consolidate and enhance Hong Kong's status as an international financial centre.
According to the China Foreign Exchange Trade System (CFETS), foreign investors have reported that Swap Connect does not yet support IMM (International Money Market) contracts and lacks an effective contract early exit mechanism, which restricts the enthusiasm of foreign institutions to participate to a certain extent. In response to this demand, the Northbound Swap Connect IMM contract has been optimized and launched this time to better meet the market trading needs of overseas asset management institutions. The enhancements also introduce historical value contracts and add a single compression service to enable early exit of Northbound Swap Connect contracts. The enhancement of the above two product features and services will also help the RMB interest rate swap market to further integrate with international standards.
The HKSAR Government warmly welcomes the new enhancement measures
The HKSAR Government warmly welcomes the series of new enhancement measures for Swap Connect. A Government spokesman said that the HKSAR Government is committed to deepening and expanding the mutual access between the financial markets of the Mainland and Hong Kong in line with the country's strategic plan for economic development. The Central People's Government's emphasis on Hong Kong's financial markets and its active promotion of the linkage between the financial markets of the two places have provided a solid policy guarantee and broad space for advancing the relevant work. The new measures are the second batch of enhancement measures announced within a month after the China Securities Regulatory Commission (CSRC) announced last month five measures to support the expansion of capital market connectivity between the two places and the listing of leading mainland enterprises in Hong Kong, further promoting the coordinated development of the financial derivatives markets in the two places. The HKSAR Government will work closely with the relevant Mainland institutions to take forward the relevant arrangements at full speed, and continue to contribute to the development of the country into a financial power and consolidate Hong Kong's status as an international financial centre.
HKEX Chief Executive Officer Eddie Chan welcomed the announcement of the enhanced Swap Connect measures by the regulators of both places. She pointed out that as the world's first derivatives market connect, Swap Connect allows Hong Kong and overseas investors to participate in the interbank market of Chinese mainland, and has been well received by investors since its launch. HKEX is working closely with the China Foreign Exchange Trade System (CFETS) and Shanghai Clearing House (SHDC) to implement these enhancements. This week marks the first anniversary of the launch of Swap Connect and the 10th anniversary of Stock Connect, and we look forward to working with our Mainland partners to continuously enhance and expand the mutual access mechanism to promote the long-term healthy development of the financial markets of Hong Kong and the Mainland.
Kenneth Tsang, Head of Hong Kong & Greater China & North Asia, Hong Kong & Greater Asia, Standard Chartered Financial Services, pointed out that the enhancements will enrich product categories and provide a more effective early exit mechanism for investors to liquidate their positions. The improvement of supporting functions will effectively reduce investors' capital requirements and allow for more flexible Swap Connect Northbound transactions.