Preventing public funds from being forced to sell shares according to fund contracts has become a driving force for many Hong Kong digital economy stocks to continue to release good news.
With only 40 days left before the latest round of Hong Kong Stock Connect standard approval, the digital economy track stocks, which have fallen sharply and jeopardized the status of the "Hong Kong Stock Connect" with a market value of HK$4 billion, are relying on good business progress and buybacks to stimulate stock prices. The status of Hong Kong Stock Connect is a key factor for many Hong Kong listed companies to maintain liquidity and valuation, and to attract public funds, especially Hong Kong Stock Connect theme funds.
Brokerage China reporters noticed that at present, many digital economy track stocks have fallen from the market value of 10 billion Hong Kong dollars to less than 3 billion Hong Kong dollars, and even some only 2 billion Hong Kong dollars left, although they are still in the Hong Kong Stock Connect list, but if the stock price fails to meet the requirements at the end of June this year, it is likely to lose the status of Hong Kong Stock Connect. According to the rules of Hong Kong stocks, the Hang Seng Composite Index will be adjusted regularly every six months, and the end of June and December are the data cut-off date, and the Hong Kong stocks in the Hang Seng small-cap stocks, if the average market value at the end of the month in the first 12 months is less than 4 billion Hong Kong dollars, it will be transferred out of the Hong Kong Stock Connect, under the power of Baotong, some stocks have risen by more than 100% within 5 months to make the market value meet the standard, and some of the market value has fallen below 4 billion Hong Kong stock standards, and it is the release of business progress and repurchase to stimulate the rise of market value.
It is better to buy early than to buy well in the digital economy track
On May 20, the digital economy track of Hong Kong stocks soared across the board, with digital industrialization, digital health, digital sports and other subdivisions among the top gainers, among which the digital industrialization variety Innovation Qizhi rose 12.4%, SenseTime rose more than 12.14%, digital sports KEEP rose more than 13%, digital entertainment platform XD Company rose about 9%, and Zhiyun Health of the digital health track rose more than 6%.
With the continuous improvement of risk appetite in the stock market, as well as the southward movement of public funds and the support of foreign institutions for the liquidity of Hong Kong stocks, the market of the digital economy track of Hong Kong stocks is attracting more and more attention from fund managers, although fund managers have suffered a lot of losses in the digital economy track of Hong Kong stocks.
Taking the digital health track as an example, due to the acceleration of aging, the addition of AI technology, the Internet penetration rate and the huge population size, it has gradually become a golden outlet comparable to the electric vehicle track and new energy, but the many subdivided participants and similar business models within the track have also made the digital health track to a large extent face the involution problem of electric vehicles and new energy, which has led to the fact that most of the listed companies in the digital health track of Hong Kong stocks have experienced huge declines.
Brokerage China reporters noticed that a public fund in Shanghai had previously "bottomed" and began to reposition Yidu Technology in the field of AI digital medicine, which helped pharmaceutical companies improve the accuracy and clinical efficiency of drug research and development through artificial intelligence algorithms, and Yidu Technology also disclosed that the company's research and development of AI diabetes digital therapy products were approved by the US FDA, but in the fluctuation of the "bottom" of the Hong Kong stock market, a Shanghai-Hong Kong-Shenzhen theme fund manager with a heavy position in Yidu Technology still left the market with a loss of about 40%.
However, for many fund managers, the Hong Kong stock market often shows that it is better to buy early than to buy well. Taking the digital entertainment platform XD Company as an example, last year, more than a dozen public funds bought the Hong Kong stock digital entertainment platform XD Company, but after experiencing a stock price drop of nearly 50%, most of these fund managers cut their positions and left. In the end, as of the end of March this year, there were only two fund products left, and the cumulative increase of XD companies in these two funds has exceeded 100% in the past five months since the beginning of this year. It is worth mentioning that these two funds that doubled their stock prices in 5 months on a single stock are actually not the "long-term investors" of XD Company, and any of the above more than ten funds, according to the information disclosed by the fund company, XD Company is a new heavy stock in the first quarter of these two funds, which means that when more than ten funds sold out of stocks at the end of last year and the beginning of this year, the stock price of XD Company basically bottomed out.
The above information means that the accuracy of fund managers' investment in Hong Kong stocks almost depends on the "two-in-one" of bottom and market risk.
The loss of Hong Kong Stock Connect status may force the public offering to sell
Behind the boom in the digital economy track, there is also the "Baotong" factor that public fund managers are extremely concerned about.
Brokerage China reporters learned in an interview that Hong Kong Stock Connect is the core channel for many digital economy track stocks to maintain liquidity and valuation, but most of the digital economy track-related varieties have fallen by 70%-90% in the past year, and the market value of many companies has been substantially lower than the standard of Hong Kong Stock Connect. According to the rules of Hong Kong stocks, the Hang Seng Composite Index will be adjusted regularly every six months, and the data cut-off time is June and the end of December respectively, and the Hong Kong Stock Connect stocks in the Hang Seng small-cap stocks will be transferred out of the Hong Kong Stock Connect if the average market capitalization at the end of the previous 12 months is less than HK$4 billion.
According to the agreement on the scope of stock investment in the relevant contracts of the Hong Kong Stock Connect theme fund, the position of non-Hong Kong Stock Connect stocks is generally not less than 80% of the fund position, especially when the relevant stocks lose their Hong Kong Stock Connect status, the stock price and valuation will also be suppressed.
At present, the market value of digital economy stocks such as Zhiyun Health, Innovation Qizhi, Mace Health, and Tongdao Liepin, which are still on the list of Hong Kong Stock Connect, is still less than HK$4 billion as of May 20, which also makes "Baotong" attract fund managers to maintain valuations as the key to the current market interpretation. On May 20, Keep, a digital sports technology company, announced that it would launch a share repurchase plan with an amount of no more than HK$100 million, which stimulated the stock price to soar by 13% on the same day, and the market value also exceeded the HK$4 billion Hong Kong Stock Connect standard.
The core of the digital economy track lies in the integration of AI technology
Regarding the investment opportunities in the digital economy track during the year, many fund managers focused on the integration and application of digital economy and AI (artificial intelligence) artificial intelligence technology.
Wang Bo, manager of the Southern Digital Economy Fund, believes that the current digital economy and AI industry are in a development trend, and different branches are in different life cycle stages, such as the technology verification stage, the application landing stage, and the practical stage that can greatly improve productivity. To select investment targets, on the one hand, it is necessary to screen various subdivisions and judge the space of industrial trends and the time and path of realization; On the other hand, from the perspective of secondary market investment, we should look for enterprises that can continue to cash in and prove their capabilities. In the field of "artificial intelligence+" investment, the focus is primarily on computing power, the core of AI infrastructure. In addition, investors should also pay attention to AI application scenarios that can significantly promote productivity development, such as generative AI and autonomous driving robots.
He believes that from the perspective of long-term industrial development, the digital economy and AI are expected to reshape the way people live and work within 10 years. At present, AI-assisted decision-making is closer to giving answers based on past experience and data probability, and the logical thinking ability needs to be improved. In the future, the breakthrough and completion of AI logical thinking and the long-term accumulation of the technology industry may bring about a blowout explosion of AI technology applications, which may generate new investment opportunities.
Liu Rongjun of Jinxin Fund believes that the development of digital economy can reduce production costs, improve product quality, accelerate transaction speed, save human resources, thereby improving the efficiency of economic operation, and the application of digital technology will bring new business models, new products and services, and bring new economic growth points and employment opportunities. The emergence of new industries, new forms of business and new models will further promote economic innovation and development. Since the beginning of this year, the continuous iteration and innovative breakthroughs in the field of artificial intelligence have made investors enthusiastic. At present, technology giants are accelerating the layout of artificial intelligence models and their applications, a new round of scientific and technological transformation is accelerating, and the commercial application scenarios of artificial intelligence in all walks of life are further expanding and deepening. At the same time, the training and inference of large AI models will put forward higher requirements for computing infrastructure, which will also bring greater demand for data centers and related supporting industries. Although there are still many places that need to be improved while the rapid development of the industry, there are still many issues related to data leakage, network security, legal boundaries, and industry supervision of computing power investment that need to be solved urgently, but we believe that the general trend of industry development will not change.
Zhao Shihong, manager of Pengyang Digital Economy Pioneer Fund, pointed out that this year's digital economy industry trend and economic recovery, profitability improvement or high-quality companies with medium and long-term prospects are the core of investment, especially in the direction of benefiting from the trend of artificial intelligence industry, judging that the domestic economy will eventually recover for the better, the willingness of the policy to care for the capital market is strong, and the overall valuation of the market is low, while the computer and electronics sector is currently significantly underperforming the market, and the internal repair momentum is strong, coupled with the expectation of interest rate cuts in overseas markets. Therefore, we are optimistic about the thematic opportunities in the digital economy sector this year.
Editor-in-charge: Wang Yunpeng
Proofreader: Li Lingfeng