The Hong Kong stock market continues to recover, and related ETFs have repeatedly hit new highs in listing, which products are worth paying attention to?

The spring breeze is proud. After a period of silence and accumulation, Hong Kong stocks have recently ushered in a long-lost recovery, and the momentum is like a rainbow. From April 22 to May 6, the Hang Seng Index achieved "ten consecutive gains", setting a record for the longest consecutive gains since February 2018. Although there has been a brief pullback in recent days, it has started a continuous upward trend since May 9, and as of May 14, the Hang Seng Index has stood firm at 19,000 points.

What is even more noteworthy is that the news that "the 20% dividend tax on Hong Kong Stock Connect for mainland individual investors may be reduced or reduced" has been widely circulated, like a spring breeze, injecting new vitality into the market. The related positive news has further promoted the upward trend of Hong Kong stocks since April, driving a number of dividend-related ETFs in Hong Kong stocks to soar, repeatedly hitting new highs since listing.

For ordinary investors, it is obviously a good choice to participate in Hong Kong stock investment and obtain rising income through the layout of relevant theme funds, especially the ETF products of Hong Kong stocks with lower fees and faster investment operations are also increasingly favored by investors. But after a streak of gains, how long can this rally last? Have Hong Kong stocks reached the allocation window? What products can investors use to continue to share the dividends of the rise in Hong Kong stocks?

Hong Kong stocks continue to pick up, and southbound funds are actively "scrambling"

On April 19, the China Securities Regulatory Commission (CSRC) issued five measures for capital market cooperation with Hong Kong, encouraging leading mainland enterprises to list in Hong Kong, stimulating a strong rebound in Hong Kong stocks and starting a continuous upward mode. Throughout April, Hong Kong stocks ranked first among the world's major stock indexes and successfully stood above the annual line.

In May, there were also media reports that domestic regulators were considering reducing the 20% income tax that mainland individual investors are required to pay when they receive dividends when investing in Hong Kong-listed companies through the Hong Kong Stock Connect. Previously, the chairman of the Hong Kong Securities and Futures Commission, Lei Tianliang, also proposed to reduce the tax level of dividends and dividends for individual investors in the Hong Kong Stock Connect, and reduce the access standards for mainland investors in the Hong Kong Stock Connect. If the relevant scheme is implemented, it will help further improve the liquidity of Hong Kong stocks.

Thanks to the superposition of multiple factors, Hong Kong stocks continued their strong upward momentum. As of May 14, the Hang Seng Index has risen 7.38% in the month, standing above 19,000 points, and the Hang Seng Technology Index and the Hang Seng Hong Kong Chinese Enterprises Index have also risen strongly by 9.21% and 6.98% respectively. Since April, the three major indexes have risen by 14.77%, 15.63% and 15.38% respectively, coming out of a rather bright market.

"Smart money" has also been actively deploying Hong Kong stocks. Wind data shows that in the first four months of 2024, southbound funds have maintained a net inflow, with a cumulative net purchase of Hong Kong stocks exceeding HK$230 billion during the year, accounting for 70% of the cumulative net purchase amount last year, and there is a strong willingness to raise funds.

China Securities 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 have played a leading role and have continued to flow in since February, gradually spreading from the dividend sector to other sectors. After April 11, foreign capital flowed into Hong Kong stocks sharply, and the resonance with domestic capital promoted the strong rise of Hong Kong stocks in this round.

Shi Baojun, fund manager of ICBC Credit Suisse Index and Quantitative Investment Department, also pointed out that the domestic economy has picked up, overseas institutions have revised the domestic economic outlook upward, and the sentiment of the Hong Kong stock market has recovered. The economic recovery has helped the overall Hong Kong stock market to improve earnings expectations. In 2024, many ministries and commissions have made it clear that "more policies conducive to stabilizing expectations, growth, and employment will be introduced, and contractionary and repressive measures will be prudently introduced", and the bottom of the valuation is clear, and investors need to re-evaluate and examine the positive impact of the above changes on stock valuation.

The performance of the underlying funds of Hong Kong stocks has been outstanding, and the related ETFs have repeatedly hit new highs in listing

Taking advantage of this wave of market, the net value of the underlying fund of Hong Kong stocks has also rebounded strongly. The underlying ETFs of Hong Kong stocks have also attracted a large amount of capital inflows, and the share of products has also increased significantly. Since April, the net inflow of funds into many products such as Hong Kong stock dividend ETF, Hong Kong Stock Connect Technology 30 ETF, gold stock ETF, and Hong Kong securities ETF has exceeded 400 million yuan, and the net subscription share of many Hong Kong stock ETFs has exceeded 1 billion.

In addition to Hong Kong stock ETFs, Hong Kong stock theme active equity funds, which had previously performed sluggishly, have also delivered good results this year, ranking among equity funds.

Some industry insiders pointed out that the outstanding performance of these products and the "voting with their feet" of funds not only reflect the market's optimistic expectations for the recovery of the Hong Kong stock market, but also show investors' preference for high-dividend and high-growth Hong Kong stocks.

Taking the Hong Kong Stock Connect Technology 30 ETF (159636), which was established in June 2022, as an example, the product tracks the CNI Hong Kong Stock Connect Technology Index, which brings together the leading hard technology companies in Hong Kong, and its constituent stocks cover technology segments such as the Internet, equipment, biotechnology, and big data. It is worth noting that the four major sectors covered by the CNI Hong Kong Stock Connect Technology Index, including Internet platform economy, high dividends, real estate and property, and innovative medicine, have formed a good complement to A-shares. In order to better meet the needs of over-the-counter investors, ICBC Hong Kong Stock Connect Technology 30 ETF Feeder Fund (Class A: 019933, Class C: 019934) has also been launched for public sale.

Another strong performance of the Hong Kong stock underlying ETF, the Hong Kong Stock Dividend ETF (159691), has also attracted market attention. This product tracks the Hong Kong Stock Connect High Dividend Select Index, focusing on listed companies with high dividend yields, sustainable earnings and growth in Hong Kong stocks, which can provide investors with relatively stable dividend income. Hong Kong stock dividend ETF has also won the favor of the market and investors due to its outstanding performance, and its scale has increased significantly from 207 million yuan at the beginning of the year to 1.176 billion yuan.

Is the Hong Kong stock market just starting? How the performance of the market outlook will be interpreted

After a continuous rise, the market and investors are undoubtedly most concerned about how the subsequent trend of Hong Kong stocks will be interpreted and whether the strong upward momentum can continue.

In this regard, analysts believe that although there is a certain risk of volatility in the market, the fundamentals of the Hong Kong stock market are still sound, coupled with the favorable policy, the strong rebound of the market is expected to continue.

ICBC Credit Suisse Shi Baojun said that the current risk-return appetite is low, from the perspective of absolute returns, under the downward trend of economic growth, the long-term interest rate in the mainland is falling rapidly, and the high-dividend assets with bond-like attributes are attractive. At present, the trading congestion of the main dividend asset industry of A-shares is at the medium and high water level, and at the same time, the high dividend of Hong Kong stocks is currently more cost-effective than that of A-share dividends, so we can pay attention to the investment opportunities of high dividends in Hong Kong stocks. "In the case that overseas risk events have not been fully cleared and may disrupt the Hong Kong stock market, there is still value in the high-dividend style with low-risk characteristics."

In order to continue to capture the dividends of the rise of Hong Kong stocks, especially to invest in dividend assets with high dividends and high dividends, Hong Kong stock ETFs have become one of the important options due to their unique advantages.

At present, there are two main channels for the A-share market to invest in Hong Kong stocks, namely opening a Hong Kong Stock Connect account for direct investment, and indirect investment through A-share listed Hong Kong stock theme funds. The former has a high investment threshold and requires investors to meet certain capital requirements; The latter not only has a lower threshold, but also has many obvious advantages if you choose a Hong Kong stock underlying ETF.

First of all, investors only need to open an on-site fund account or stock account to buy, there is no capital requirement, and there is no need to open Hong Kong stock trading permissions, which is convenient and fast.

Secondly, it has low overhead and operating costs. Taking Hong Kong Stock Dividend ETF and Hong Kong Stock Connect Technology 30 ETF as examples, the management fee rate of these two products is 0.45%, the custody fee is 0.07%, and the total fee rate for holding for 1 year is only 0.52%, which is much lower than that of ordinary active equity funds and bond funds.

Thirdly, implement T+0 trading, buy on the same day and sell on the same day, you can take profit and stop loss at any time.

Fourth, diversity and flexibility. You can focus on opportunities in different sectors or themes of the Hong Kong stock market, such as technology, financials or dividend stocks, etc., and investors can flexibly choose different ETFs according to their own risk appetite and market conditions to achieve diversification.

In addition, the advantages of ordinary ETFs such as higher transparency and more diversified risks of index-tracking products are also available in Hong Kong stock underlying ETFs, which will not be repeated here.

It should be added that for ordinary investors who do not have a stock account or an on-exchange fund account, they can also purchase feeder funds of related ETFs through fund company direct sales or fund distribution channels such as banks and third-party platforms, and conveniently invest in Hong Kong stocks, such as the ICBC Hong Kong Stock Connect Technology 30 ETF Feeder Fund (Class A: 019933, Class C: 019934).

Of course, after the recent sharp rise in Hong Kong stocks, there may be certain divergences and shocks, and investors should also pay attention to the risks while enjoying the dividends brought by the market recovery. In the future, with the continuous improvement of the mutual access mechanism between the mainland and Hong Kong markets and the gradual recovery of the global economy, the Hong Kong stock market is expected to usher in more development opportunities. Investors should cautiously seize the opportunity, make a reasonable layout, and strive to share the development dividend of the Hong Kong stock market.

Source: National Business Daily

Risk Warning: The fund manager manages and uses the fund property in accordance with the principles of due diligence, honesty and trustworthiness, prudence and diligence, but does not guarantee that the fund will be profitable, nor does it guarantee the minimum return. The funds mentioned are equity funds, which have higher risks and returns than hybrid funds, bond funds and money market funds. It is an index fund, which mainly adopts a full replication strategy to track the market performance of the underlying index, and has similar risk-return characteristics to the underlying index and the stock market represented by the underlying index; You can also invest in the underlying stocks of the Hong Kong Stock Connect, but you also need to bear the exchange rate risk and the unique risks caused by the differences in the investment environment, investment targets, market systems and trading rules under the Hong Kong Stock Connect mechanism. Before investing in a fund, investors should carefully read the "Fund Contract", "Prospectus", "Fund Product Key Facts Statement" and other legal documents, and choose investment varieties suitable for their own risk tolerance on the basis of a comprehensive understanding of the product situation, fee structure, charging standards of each sales channel and listening to the suitability opinions of the sales agency. Funds are risky and should be invested with caution.