The recent Hong Kong and A-share markets can be said to have exploded the entire market.
After the National Day holiday in Hong Kong, the Hong Kong stock market ushered in a good start. At the close of trading on October 2, the three major indexes rose sharply, among which the Hang Seng Index rose 6.2%, hitting a new high since January 2023.
Entering the third day, although Hong Kong stocks pulled back in the morning, they staged a "V" shaped rebound in the afternoon, showing that market confidence has not decreased. Zhang Yidong, global chief strategy analyst of Industrial Securities, said that the shock of Hong Kong stocks is precisely to verify the reversal logic, rather than a short-lived wave of rebound. In October, Hong Kong stocks and A-shares are expected to turn from the recent short-squeeze rally to a more sustained shock reversal.
So, how to seize the opportunities in the market outlook now?
1. Funds run into the market, opening a new moment of carnival for Chinese assets
Judging from the background of this round of market, on the one hand, the Federal Reserve has started a cycle of interest rate cuts, and on the other hand, domestic policies have been frequent, which has greatly boosted market expectations.
From the perspective of global capital flows, with the continuous rise of assets such as U.S. stocks and Indian stocks, which are already at a high level, compared with the low valuation of Chinese assets, China has become a safe haven under the Fed's interest rate cut cycle, and has benefited from the release of liquidity to attract an influx of external funds.
(Source: Wind Quotes, as of October 3)
From the perspective of domestic macro policies, a series of policy supports, economic recovery expectations, but also for the market to release confidence.
From an institutional point of view, the market is optimistic about the sustainability of the market, believing that the strength and speed of the market may exceed expectations.
Although the market took a sharp dive in the morning of the 3rd, the "V" shaped reversal staged in the afternoon further showed that the upward trend of the market has not changed, and the special investment sentiment is continuing to heat up, and funds are running into the market to grab funds.
At the same time, combined with the guidance of medium and long-term funds to enter the market, the introduction of the private economy promotion law and the relaxation of foreign investment access mentioned by the Political Bureau of the Central Committee, this also brings more expectations for the performance of the follow-up market.
2. AIM Vaccine has become the leader of the rise, and there are several logical supports behind it
Standing at present, the market has risen sharply, how to tap the opportunities in the follow-up market?
Or you can explore the elastic targets in the market from the perspective of expectation difference. At the same time, combined with the characteristics of the bull market and following the law of "the strong are always strong", in the short-term correction of the market, investors tend to give priority to looking for stocks with strong growth potential and have shown a leading position in the previous performance.
It can be seen that in this round of sharp rise, there is a Hong Kong stock that has shown a great "alpha" advantage, which has risen in just four trading days and performed amazingly. Even in yesterday's (3rd) market shock adjustment, the performance was relatively strong.
(Source: Futu Quotes)
So, what is unique about AIM Vaccine? What kind of logical support is behind it?
This may be considered from the following perspectives:
First, judging from the background of the recent market surge, the chief strategy analyst of CICC's research department believes that in the absence of southbound funds, overseas funds are undoubtedly the main force. According to the currently available data, overseas funds are still mainly passive and transactional, and the return of long-term funds is not obvious. However, such a rapid rise should force the underweighted long-term funds to "make up their positions" to prevent too much underperformance and "shorting", not to mention that the previous short selling of Hong Kong stocks has increased with the rise of the market. At present, active funds allocate 5% to Chinese stocks (14.6% at the high point at the beginning of 2021), with a 1 percentage point underweight. If it is changed from underweight to standard, it is expected to bring in nearly $40 billion in inflows, equivalent to the total outflows since March 2023.
It is worth mentioning that the previous Huafu Securities research report showed that in September, the international intermediary funds in the Hong Kong stock market began to turn into net inflows after several months of continuous outflows, becoming an important incremental capital in the market. Among them, the net inflow of funds of international intermediaries since mid-to-late September reached HK$39.6 billion, exceeding the net inflow of HK$20.5 billion of southbound funds.
(Source: Wind, Huafu Securities)
In the context of the rush for funds, it can be seen that as a constituent stock of MSCI and the underlying stock of the Shanghai-Shenzhen-Hong Kong Stock Connect where southbound funds enter, AIM Vaccine is undoubtedly a direct beneficiary, and considering that the mainland market opens after the holiday, after the resumption of trading of the Shanghai-Shenzhen-Hong Kong Stock Connect, the influx of southbound funds may also be a high probability event.
Second, from the perspective of market valuation, the company has benefited from the entire market environment and the impact of the pharmaceutical sector's valuation for a long time, and the market has been wrongly killed.
If you look at the highest price of HK$100 set in March last year, it has fallen by 90% compared with the previous bottom of HK$8.22. Now, with the advent of tailwinds, the company's performance in the capital market is now ushering in the road to value return, so the market has also released greater flexibility.
Finally, back to the fundamentals.
As a leading full-chain vaccine group in China, AIM Vaccine has four wholly-owned licensed vaccine manufacturers, a sales network covering 31 provinces, autonomous regions and municipalities directly under the central government in China, and an innovative vaccine pipeline covering the world's top 10 vaccine varieties.
Considering the scarcity of vaccine licenses and the advantages of industry access barriers they bring, and the growth space of the entire vaccine industry, the value of only one licensed vaccine manufacturer should not be underestimated. This shows the great value potential of AIM Vaccine.
It is worth mentioning that this year is also the year of centralized listing declaration of AIM vaccine product pipeline, and there will be three blockbuster single products such as iterative serum-free vaccine, 13-valent pneumonia conjugate vaccine, and 23-valent pneumonia polysaccharide vaccine, which will undoubtedly become an important driving force for the company's performance growth and bring a blockbuster catalyst to the follow-up market performance.
At the same time, AIM Vaccine's international layout is also accelerating, and the registration of marketed products in Southeast Asia, Africa, South America, the Middle East and other regions has begun, which will open up new markets for the company, increase its global market share, and open up greater growth space.
Therefore, it is not difficult to foresee that AIM Vaccine is expected to continue to rise in the resonance of performance and valuation in the future.
3. Conclusion
Based on the current market trend and policy environment, there is reason to continue to be optimistic about the future performance of the Hong Kong stock market and the A-share market, especially the biomedical sector, which has been at the bottom of the valuation in recent years.
As the leader of the biomedical sector in this round of market, AIM Vaccine is expected to bring more surprises to the market in the future market interpretation by virtue of its leading position in the field of innovative vaccines and a series of catalytic effects brought by the blockbuster products that will be launched soon.