Since China launched the "policy package", a large number of A-shares have risen to the limit, and southbound funds have poured in, driving Hong Kong stocks to soar. Yesterday, Hong Kong's Hang Seng Index closed up 6.2%, and the Hang Seng Tech Index rose 8.53%.
Account opening, trading volume surged, young investors poured into the stock market, and brokerages were busy. ”
Today, the Hong Kong stock market has seen a relatively large adjustment, but in the afternoon, Hong Kong stocks rebounded in a V-shape and recovered most of the losses. As of the close, the Hang Seng Index closed down 1.47%, ending a six-day winning streak.
Will the Hong Kong stock market continue to rebound? Many institutions and analysts believe that a reversal in Hong Kong stocks may be happening.
In addition, who is entering the Hong Kong stock market during the A-share market break? What sectors do incremental funds prefer?
After the shock, how will Hong Kong stocks go?
Analysts and traders are increasingly convinced that the bull market will continue.
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.
Chow Weiming, head of Citigroup's Asia Pacific Capital Markets Department, pointed out that the Fed's interest rate cut has led to a decline in Hong Kong interest rates, coupled with Chinese mainland's series of large-scale rescue measures, which can be regarded as a combination of time and place, if these factors can promote the sustained recovery of the mainland economy, it is bound to drive the market to recover, and it is expected that the Hong Kong new stock (IPO) market can return to the bull market of three or four years ago next year.
Sat Duhra, fund manager at Janus Henderson Group Plc., said at yesterday's conference that global investor interest in markets such as Korea and India is waning, with "China being the only focus at the moment."
Jason Lui, a strategist at France Paribas, believes that some foreign investors are reducing their holdings in Japan and reallocating funds back to China.
Eric Yee, investment manager at Singapore's Atlantis Investment Management, said they were trimming their long positions in the rest of Asia to buy into China.
The final height and trend of Hong Kong stocks may still depend on A-shares.
Chen Guo, chief strategic analyst of China Securities Securities, said that this round of market is a "confidence revaluation bull", and he is still optimistic about the performance of A-shares after the long holiday, and the market is currently in the initial stage of a bull market.
Chen Guo stressed that even if there is a certain degree of correction after the holiday, or even if the market continues to sort out for a period of time after the correction, it is not the end of the bull market.
Account opening and trading volume have surged, and Hong Kong brokerages are busy
As the market goes through a high tide, Hong Kong's stockbrokers are going through the busiest period of their careers.
According to Hong Kong media reports, some brokerages and banks are overloaded with systems, making it difficult for customers to log in to mobile apps.
Edmund Hui, CEO of Phillip Securities, one of Hong Kong's largest local brokerages, said the company's account opening business has seen tremendous growth, with many customer service staff canceling their holidays and being on call 24 hours a day in response to an unprecedented surge in customer enquiries.
Other trading platforms are facing the same situation. Tiger Brokers, a popular trading platform for retail investors in Hong Kong, saw a 73.4% surge in account openings last week, and a 10% year-on-year increase in the number of active users of its mobile app.
Futu Holdings, one of Hong Kong's largest online brokers, said that the number of account opening inquiries last week was 40% higher than usual, and the stock trading volume of Futu's online platform increased by 95% from the previous week, and the number of investors increased by 60%. A spokesperson said: "Last week's buying spree was largely focused on Hong Kong stocks and A-shares traded through Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect. ”
Kenny Wen, Head of Investment Strategy at KGI Asia Ltd., said:
"It was a very busy day and I didn't have time for lunch due to constant customer inquiries. We're likely to remain busy for another one to two months, as positive market sentiment is likely to keep trading volumes high. ”
Young investors poured into the stock market
Hong Kong's stock market reached a multi-year high of HK$434 billion ($55.9 billion) on Wednesday, October 2. Many young investors, worried about missing out on this wave of the market, have opened accounts on online trading platforms.
As mentioned above, the number of accounts opened by Tiger Brokers last week increased by 73.4% compared to the previous week, with about 80% of new accounts opened by young people under the age of 30.
Due to the surge in users, the online trading platform systems of banks and brokerages have been overloaded, resulting in some novice investors who want to enter the market unable to open accounts smoothly.
Some investors did not want to miss out on the opportunity and abandoned online operations in favor of opening stock trading accounts offline. With the help of the staff, some people find it quicker. Tom Chan Pak-lam, Honorary President of the Securities Association of Hong Kong, said:
"It's been interesting that many young investors in their 20s and 30s have recently gone to some of the oldest brokerage branches in Hong Kong to open new stock trading accounts. Usually, these young investors tend to open accounts online, but now, due to the overcrowding of some online platforms, some young people choose to open stock accounts offline. ”
Tom Chan Pak-lam also noted that the continued rally in the market and record trading volumes have sparked interest among young people, and more investors are expected to open stock accounts to trade, while at the same time, it is also attracting previously inactive investors back into the market.
Who is buying Hong Kong stocks and what are they buying?
During the "absence" of southbound funds, who is entering the Hong Kong stock market?
Huafu Securities said that in September, the international intermediary funds in the Hong Kong stock market turned into a net inflow again after several months of continuous outflows, becoming an important incremental capital in the market. Since mid-to-late September, the net inflow of funds from international intermediaries has reached HK$39.6 billion, exceeding the net inflow of HK$20.5 billion from southbound funds.
Huatai Securities also pointed out that the return of foreign capital allocation (especially passive index foreign institutions) has played an important role in the capital side.
What sectors do incremental funds prefer?
Huafu Securities pointed out that the Hong Kong stock market in the international intermediary holdings preference for optional consumption and information technology sector, which is also an important part of the Hang Seng Technology Index, from this point of view, since mid to late September, the rapid return of international intermediary funds is an important factor in the Hang Seng Technology Index. As of September 30, international intermediaries in the Hong Kong stock market accounted for 30% of the optional consumer goods and 25% of the information technology, much higher than other industries.
How much more incremental funding is likely to enter the market in the future?
Huatai Securities estimates that the incremental funds of Hong Kong stocks in the future may come from the covering effect of foreign capital and the liquidation effect of short positions:
First, the global foreign investment replenishment effect; As of the end of the second quarter, Chinese stocks accounted for 1.3% of the equity portfolios of the world's top 20 asset management institutions (including mutual funds/hedge funds/trusts, etc.), which was higher than that of MSCI ACWI China benchmark weight is underweight by 1.9 pct, and if the expected improvement is expected, foreign investment allocation to China will return to the level of the first quarter (underweight 1.7 pct), which may bring about US$17 billion of net inflows to top asset managers, and if it returns to the 2018-2020 pivot level (underweight 0.5pct), it may bring about US$100 billion of net inflows.
second, the effect of liquidation of stock shorts; Although the proportion of short trading in Hong Kong stocks has been at a historically low level since September, the number of open short selling shares in the whole market has not dropped significantly, and the power of stock short liquidation has not yet been fully released.
Huafu Securities also believes that the recent outstanding performance of Chinese assets represented by Hong Kong stocks is the result of multiple factors, on the one hand, various favorable domestic policies have been frequently introduced, which has greatly boosted market confidence; On the other hand, the overseas Fed cut interest rates in September, and the global liquidity environment tends to be loose at the margin, while the global equity market often benefits from the logic of the denominator in the early stage of the Fed's interest rate cuts.
Therefore, on the whole, the current Hong Kong stock market is still on the way, and there is still room for growth in the future. Structurally, if the international intermediary funds in the Hong Kong stock market continue to return in the future, the growth sector represented by Hang Seng Technology is expected to continue to dominate.
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