The first debate of the U.S. election "boots landed", and the Hong Kong stock market "election trading" may be advanced. Although the recent U.S. inflation data has cooled marginally, and the month-on-month growth rate has declined significantly during the year, the path of interest rate cuts is still repeated, and the U.S. Treasury interest rate has risen recently. The weakening of the global manufacturing cycle and rising political uncertainty in Europe may continue to bring upward pressure on the dollar index. Last week, Hong Kong stocks repurchased about HK$10.6 billion, the first time since 2010 that the buyback exceeded HK$10 billion in a single week, but the low short level means that the market may not be at an extremely pessimistic level. In the second half of the year, Hong Kong stocks are expected to be repaired along the gradual path of gradual elevation at the bottom under the favorable multi-factor, and it is recommended to deploy Hong Kong stocks at a low level.
1. Hot comments
1. The timing of the Fed's interest rate cut has been slightly repeated
Inflation data continued to improve month-on-month. The U.S. PCE in May was slightly lower than market expectations, and the consumer confidence index fell in June. The U.S. core PCE price index fell from 0.08% in May to 0.08% month-on-month, slightly lower than the Bloomberg consensus forecast of 0.13%; PCE slipped to 0% from 0.3% month-on-month, in line with expectations. PCE consumer spending rebounded to 0.3% in May from -0.1%, in line with expectations. The Conference Board's consumer confidence index fell to 100.4 in June, slightly better than the 100 marketers expected, but down from 101.3 in the previous month.
High-frequency data cools down slowly, but resilience remains. High-frequency consumption data in June showed that the momentum of U.S. consumption has declined; The decline in the first application exceeded expectations, indicating that the job market is still resilient; Mortgage demand picked up slightly. On the consumption front, the Atlanta Fed's Nowcast on real personal consumption fell 0.3pp from the previous week to 2.5%. In the job market, the number of first-time applicants fell 06,000 to 233,000 in the latest week, lower than the expected 236,000, and job vacancies continued to fall. In terms of real estate, the interest rate of the 30-year fixed-rate mortgage was 6.86%, and the demand for mortgage applications increased slightly.
2. The logic of Hong Kong stocks supported by policies and liquidity has not changed
The small adjustment of Hong Kong stocks in this round is due to the fact that the internal support logic has not changed: 1) foreign positions and chips are more fully cleared, 2) the valuation is more sufficient, and 3) the difference in profit benefit structure is more advantageous. Looking ahead, the market space comes from the repair of domestic fundamentals and the catalyst of policy. Among them, the market is highly concerned about the gradual implementation of measures such as the Hong Kong Stock Connect dividend tax, the adjustment of access standards for mainland investors, and the RMB counter, and Hong Kong stocks have risen rapidly in the short term under policy expectations in April/May/June, and are expected to fully realize the benefits with the implementation of the policy in the future.
From the perspective of capital allocation, foreign positions and chips are relatively sufficient. The allocation of EPFR active funds to Chinese equities has fallen from a high of 14.6% in October 2020 to a low of 5% at the beginning of the year (a slight increase to 5.7% at the end of May). Although this low level cannot be used as a basis for a large-scale return of foreign investment, the further shock and pressure from this level is much less severe than the impact from a high of 14.6% to 5%.
Valuation protection is relatively sufficient, and earnings expectations are gradually improving. The valuation of Hong Kong stocks is still 1.7 standard deviations lower than the average of the past ten years, and the Internet, as the "core asset" of Hong Kong stocks, has been relatively sufficient after three years of adjustment and has a comparative advantage. The dynamic P/E ratio of the Hang Seng Composite Information Technology sector has fallen from a high of 61.9x at the beginning of 2021 to 22.1x currently, with a correction of nearly 70%. Some of these key stocks, such as Tencent and Alibaba, have also fallen by more than 55% from their highs at the end of 2020 and early 2021, respectively. Valuations in major global stock markets are cost-effective. There are many reasons why Hong Kong stocks bottomed out in the first half of this year: first, the valuation of the index is low enough to have a significant advantage in global comparison; Second, the median valuation of Hong Kong Stock Connect is low, which indicates that the decline of small and medium-sized market capitalization targets is also limited; Third, the forward-looking performance of Hang Seng Technology has hit a new high, which has formed a support for the performance of Hong Kong stocks, and the Hang Seng Technology Weighted Index represented by emerging Internet companies.
3. Hang Seng Technology benefits from the new growth points of application and content brought about by new technological changes
AI has brought a new round of technology cycle to Hang Seng Technology, and AIGC has become a mainstream trend in empowering the development of the industry. The Hang Seng technology giants represented by the Internet have obvious first-mover advantages based on capital, data, application scenarios, and engineers, and the new super application giants of AI are unknown, but they are inextricably linked with the Internet giants is the result of the times, and it will be inevitable that there will be ten baggers in the direction of vertical applications. In addition, in the era of mobile Internet, China lags behind the United States in the underlying technology such as operating system and computing power, although it is difficult, but this round of scientific and technological revolution also provides an opportunity to keep up with overseas in core technologies. And the hardware and computing power can be measured,
From the perspective of elasticity, the application side has the largest space and the most bull stocks, which is worth paying attention to.
2. Investment Advice and Follow-up Prospects:
The earnings expectations of Hang Seng's large Internet companies have returned to the growth trend, and when the performance is revised upwards and the valuation is at a low level relative to the historical period, it can increase the allocation of Hong Kong stocks to the Internet industry after the marginal improvement of the macro environment.
Related Products:
1. The Hang Seng Internet Technology Index (index code: HSIII) tracked by the Hang Seng Internet ETF (513330) and its feeder fund (Class A: 013171, Class C: 013172) is scientifically designed and selects the constituent stocks classified as information technology industry in the Hang Seng Composite Index to reflect the overall performance of Hong Kong-listed companies in the Internet and technology sectors. From the perspective of Wind's first-level industry standards, 26 of the 31 constituent stocks are information technology, accounting for more than 60% of the weight.
2. The Hang Seng TECH Index ETF (513180) and its feeder fund (Class A: 013402, Class C: 013403) track the Hang Seng TECH Index (index code: HSTECH), which consists of 30 of the largest Hong Kong-listed companies with high correlation to technology themes, to reflect the overall performance of Hong Kong-listed companies in the technology sector. From the perspective of Wind's first-class industry standard, the weight of information technology accounts for more than 52%.
Data sources: Wind, CICC, Huatai Securities, Founder Securities, China AMC, the above products have a risk level of R4 (medium and high risk), and the above funds belong to equity funds, and the risk and return are higher than those of hybrid funds, bond funds and money market funds. Individual stocks are not recommended as a recommendation. When subscribing for Class A funds, a one-time subscription fee will be charged, and there will be no sales service fee; There is no subscription fee for category C, but there is a sales service fee. There may be a big difference in the long-term performance of the two due to different fees and establishment times, etc., please refer to the product periodic report for details. Before investing in a fund, investors should carefully read the fund's "Fund Contract", "Prospectus" and "Product Key Facts Statement" and other fund legal documents, fully understand the risk-return characteristics and product characteristics of the fund, and fully consider their own risk tolerance according to their own investment objectives, investment period, investment experience, asset status and other factors, and make rational judgment and prudent investment decisions on the basis of understanding the product situation and sales suitability opinions, and independently bear the investment risk. The Hong Kong stock market implements T+0 turnaround trading, and there is no limit on the rise and fall of individual stocks, and the stock price of Hong Kong stocks may show more drastic stock price fluctuations than A-shares), exchange rate risk (exchange rate fluctuations may cause losses to the investment income of the fund), and the risk that may be brought about by the inconsistency of trading days under the Hong Kong Stock Connect mechanism (in the case of the opening of the mainland market and the closure of Hong Kong market, Hong Kong stocks cannot be traded normally, and Hong Kong stocks cannot be sold in time, which may bring certain liquidity risks), etc. The fund mainly invests in the constituent stocks of the underlying index and alternative constituent stocks, which are higher risk and higher return products in equity funds. The Fund is an offshore securities investment fund and invests primarily in financial instruments with good liquidity in the U.S. securities market. In addition to the general investment risks such as market fluctuation risks similar to those of domestic securities investment funds, the Fund is also exposed to special investment risks faced by overseas securities market investments, such as exchange rate risk and U.S. market risk. Cross-border ETFs implement the T+0 rotation trading mechanism, which shortens the capital operation cycle, which may bring short-term volatility risks. The Fund is an ETF fund, and investors investing in the Fund are exposed to potential risks such as tracking error control not reaching the agreed target, suspension of services by index compilers, suspension of trading of constituent bonds, risk of deviation between the return of the underlying index and the average return of the stock market, risk of fluctuation of the underlying index, risk of deviation between the return of the fund's portfolio and the return of the underlying index, risk of change in the underlying index, risk of discount and premium of the trading price of the secondary market of fund shares, risk of error in the subscription and redemption list, Refer to the risk of IOPV decision-making and IOPV calculation error, delisting risk, investor subscription and redemption failure risk, fund share redemption consideration realization risk, derivatives investment risk, etc.
For ETF feeder funds, the fund's assets are mainly invested in the target ETF, and in most cases a high proportion of target ETF investment will be maintained, and the net value of the fund may fluctuate with the net value of the target ETF, and the risks associated with the target ETF may directly or indirectly become the risks of the ETF feeder fund. The specific risks of ETF feeder funds also include: tracking deviation risk, risk of performance difference with the target ETF, risk of discontinuation of services by the index compiler, risk of change of the underlying index, risk of suspension or default of constituent bonds, etc.
This material is not intended as any legal document, the views are for reference only, all information or opinions expressed in the material do not constitute investment, legal, accounting or tax advice, and our company does not make any guarantee for the final action advice on the content of the material. Under no circumstances shall the Company be liable to any person for any loss arising from the use of any content in this material. The market is risky, and you need to be cautious when entering the market.