After yesterday's sharp rise, the Hong Kong stock market began to cool down today, and the three major indexes showed a pullback. As of press time, the Hang Seng Index fell 3.74% to 21,604.62 points, the Hang Seng China Enterprises Index fell 4.16% to 7,706.58 points, and the Hang Seng Tech Index fell 6.26% to 4,843.19 points.
Yesterday's "soaring" Chinese-funded brokerage stocks and real estate stocks returned to "calm" today. Hong Kong real estate stocks opened higher and lower in the morning, Greenland Hong Kong fell more than 30%, CIFI Holding Group, R&F Properties, Sunac China, Tianyu Real Estate, Kaisa Group, Logan Group, etc. fell more than 20%. Chinese brokerage stocks fell quickly after opening higher until they turned green, of which Orient Securities fell more than 16%, CITIC Securities fell more than 12%, and GF Securities and CICC fell more than 10%.
Industry insiders generally believe that the valuation of Hong Kong stocks shows ample upside. From the perspective of incremental funds, on the one hand, the global foreign capital replenishment effect, in the context of expected improvement, it is expected that a large number of incremental funds will enter the market; On the other hand, the effect of stock short liquidation, the liquidation power has not yet been fully released, and there may be a lot of room for this round of Chinese asset rally.
There was an adjustment in the Hong Kong stock market
The soaring Hong Kong stock market is returning to rationality.
In early trading today, the three major indexes of Hong Kong stocks all pulled back. As of press time, the Hang Seng Index fell 3.74% to 21,604.62 points, the Hang Seng China Enterprises Index fell 4.16% to 7,706.58 points, and the Hang Seng Tech Index fell 6.26% to 4,843.19 points.
China and Thailand have previously warned that the current extremely high slope of violence is unsustainable. With the Hang Seng Index rising to a high near the high of early January 2023 and the short-term valuation repair has been sufficient, the volatility of Hong Kong stocks is expected to increase significantly, and high profit-taking pressure cannot be ruled out.
Looking ahead, China Securities believes that the valuation of Hong Kong stocks shows sufficient upside. In terms of market allocation, the Hong Kong stock technology and Internet sector has significantly recovered in profitability, benefited from the dividend repurchase wave in valuation, and benefited from the favor of foreign capital in terms of liquidity, so it is the most noteworthy.
Real estate stocks and brokerage stocks dived
JPMorgan analysts pointed out in a report on Wednesday that the current valuation level of Chinese real estate stocks has reflected a similar operating environment to that before the Evergrande crisis, which is unreasonable.
One stone stirs up a thousand waves. Or affected by the above news, Hong Kong real estate stocks opened higher and lower in the morning. Greenland Hong Kong fell by more than 30%, and CIFI Holding Group, R&F Properties, Sunac China, Tianyu Real Estate, Kaisa Group, Logan Group, etc. fell by more than 20%.
Chinese brokerage stocks opened higher and then quickly fell back until they turned green. As of press time, Orient Securities fell more than 16%, CITIC Securities fell more than 12%, GF Securities and CICC fell more than 10%, Everbright Securities fell more than 9%, China Galaxy fell more than 6%, Guolian Securities fell more than 5%, and China Securities Construction Investment Securities fell more than 4%.
Can China's strong asset market continue?
Overnight, the performance of Chinese assets remained remarkable. The Nasdaq China Golden Dragon Index closed up 4.93%, Bilibili rose more than 10%, Futu Holdings, Pinduoduo, Li Auto, JD.com rose more than 4%, Xpeng Motors rose more than 3%, and Alibaba rose more than 2%.
At the same time, foreign investment has recently accelerated its "return to China". Mount Lucas Management, a hedge fund from United States, has built a bullish position in Chinese ETFs, while GAO Capital in Singapore and Timefolio Asset Management in Korea are buying Chinese blue chips, according to a new Bloomberg interview. According to the latest documents of the Hong Kong Stock Exchange, JPMorgan Chase increased its holdings of Ping An H shares of China by 39,861,682 shares on September 26, costing about HK $1.771 billion, increasing its shareholding to 8.28%. (Previously reported: Chinese assets continue to rise, and the Nasdaq China Golden Dragon Index breaks through 8,000 points!) ）
Many investors have seen a sharp pullback and want to take advantage of the dip to enter the market, so can the current round of China's asset rally continue?
Huatai Securities believes that from the perspective of incremental funds, the first is the global foreign capital replenishment effect. It is estimated that as of the end of the second quarter, Chinese stocks accounted for 1.3% of the equity portfolio of the world's top 20 asset management institutions (including mutual funds/hedge funds/trusts, etc.), which is 1.9 pct lower than the MSCI ACWI China benchmark weight. The pivot level in 2020 (underweight 0.5pct) may bring about US$100 billion in net inflows. Secondly, the effect of closing short positions in stock. 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.
DataTrek Research, a market research firm, said that if history is any guide, there may be a lot of room for this round of rally. According to the agency, if you compare the relative performance of iShares China Large Cap ETF (FXI) and SPDR S&P 500 ETF Trust (SPY) in a 100-day time frame, Chinese stocks have outperformed U.S. stocks by more than 30 percentage points during the positive policy shifts in 2009, 2015 and 2023, and are currently only 13 percentage points ahead.
Source: Shanghai Securities News
Editor: Xiaoya