On January 20, Hong Kong stocks opened high throughout the day, with the Hang Seng Index closing up 3.42% and the Hang Seng Technology Index up 4.5%. Technology stocks, real estate stocks, property management stocks and insurance stocks were all strong.

Since the beginning of the year, compared with the volatile trend of US stocks, the rebound performance of Hong Kong stocks has attracted a lot of attention. Hong Kong stocks with a deep correction in 2021 are being actively sought after by all kinds of funds: intensive buybacks by companies, a large proportion of ETF share growth in a number of Hong Kong stocks, and steady southward capital inflows; institutions say they are strategically optimistic about the allocation of high-quality Hong Kong stocks.

In the relatively optimistic expectations, what should be the current Nuggets Port stocks? What directions do you focus on?

Societe Generale Securities Zhang Yidong team believes that central enterprises in the Hong Kong stock market is ushering in a new opportunity for revaluation.According to its recently released research report, the central enterprises in the field of power operators in Hong Kong stocks ushered in a revaluation in 2021, which opened the prelude to the revaluation of central enterprises in Hong Kong stocks. At present, the high premium of AH shares is also an opportunity for southward funds to actively allocate Hong Kong stocks.

• ValuationBy the end of last year, nearly 70% of the central enterprises in Hong Kong were in a clean state, with a price-to-earnings ratio of only 6.0 times earnings under the overall profit method, the lowest since 2012.

• Enterprise fundamentalsThe central enterprises of Hong Kong stocks have better profit quality, low financing costs and convenient financing channels, which have obvious competitive advantages compared with the private enterprises with frequent credit default risk last year.

• Due to less foreign holdings in central enterprises and less selling pressure, in the systemic stock price collapse caused by policy risks.Compared with private enterprises, central enterprises are less prone to stampede selling, so the stock price has a certain degree of resilience, so it is a good safe haven for funds.When Hong Kong stocks rise as a whole, it is expected that central enterprises in Hong Kong stocks will rebound in valuation faster than private enterprises, which can greatly attract southward capital.

It is not a unique instance, but has its counterpart,Cathay Pacific Securities said in a research report earlier this month that the "Spring Market" is optimistic about the main line of state-owned enterprise reform, and the leaders of central enterprises are particularly worthy of attention.As the examination year of the three-year action plan in 2022, the relevant state-owned enterprises will have more motivation to actively manage market value and transmit company value.

So how to select the investment targets for the reform of state-owned enterprises?The agency points out that it focuses on central enterprises that have done equity incentives in 2020-2021 and have benefited from high dividends (dividend index) in areas where central finance is intensive.In the past two years, the debt default rate of state-owned enterprises is significantly lower than that of private enterprises, and the leaders of state-owned enterprises have a higher dividend yield. Based on the logic of steady growth and low valuation repair, state-owned enterprises are expected to be the first to benefit.

The following picture shows some Hong Kong stock central enterprises in line with the industry direction recommended by the institutional strategy, which are for reference only and are not recommended as individual stocks.

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