On Thursday, May 12, US stocks closed sharply lower overnight. Hong Kong stocks opened lower this morning. The Hang Seng Index opened down 1.35% and the Hang Seng Technology Index fell 2.52%.

By the close, the Hang Seng Index closed down 2.24%, the Hang Seng Technology Index fell 3.84%, automobiles, gold and inner housing stocks led the decline, large technology stocks fell generally, XPeng Inc. fell more than 9%, JD.com Group, Bilibili Inc. and Li Auto Inc. fell more than 7%, and BABA fell more than 6%.

Standing at the moment, how should we view the investment opportunities of Hong Kong stocks? Do you want to copy the bottom? An interesting sign is that at a time when the market continues to pull back, well-known domestic fund managers such as Chiu Tung-wing, the Middle Gung Fund, have stepped in to "bottom out" Hong Kong stock Internet companies, saying that "Hong Kong stocks have changed from structural opportunities to systemic opportunities".

The movement of the funds of the above-mentioned long-term institutions is of great reference value for us to understand the current volatile market.

Let's take a look.

The star fund manager has made a "bottom check".

This year, the substantially adjusted Internet sector has gradually entered the vision of "value school" fund managers, and attracted them to substantially increase their positions in some Internet stocks.

For example, the quarterly report shows that the "value school" fund managers, on behalf of Qiu Dongrong's management, have substantially increased their positions in Meituan-W and Kuaishou Technology-W in the first quarter. Meituan-W not only entered the top 10 positions, but also was directly increased to the largest stock of the two funds, accounting for 10.04% and 9.55% of the net value of the fund, respectively. At the same time, Kuaishou Technology-W ranked the fourth and seventh largest stocks of the two funds respectively.

Coincidentally, Yuan Weide's CEIBS Diversified value and CEIBS emerging value also increased Meituan-W's position to the largest heavy stock in the first quarter of this year, reaching 11.06% and 10.27% respectively. Yuan Weide is a dark horse among value style fund managers in recent years. he is a member of the value strategy group of CEIBS funds. the investment style has the characteristics of "low valuation" and "paying attention to the margin of safety". It also insists on the quality, growth and prosperity of individual stocks.

In addition, the Anxin value discovery and return managed by Chen Yifeng made a small increase to Tencent. He is also a very representative value-style fund manager in the market. in many public interviews, he summed up his investment philosophy as choosing a good cheap company, that is, buying a valuable asset in the future at a reasonable price or with marginal protection.

The above-mentioned fund managers also spent a lot of space in the quarterly report to express their optimism about Hong Kong stocks, especially some Internet stocks.

Hong Kong stocks have changed from structural opportunities to systematic opportunities

So, standing at the moment of the pullback, do Hong Kong stocks have the value of adding positions?

Qiu Dongrong, who currently manages more than 20 billion yuan, wrote in the latest quarterly report, "what deserves more attention is the substantial adjustment of Hong Kong stocks in terms of valuation, fundamentals and liquidity."We believe that the opportunities for Hong Kong stocks have changed from structural opportunities to systematic opportunities, which is worthy of strategic allocation.For example, he believes that the growth stocks represented by the Internet, science and technology, and pharmaceuticals have fallen back to a very attractive level, and many of the constituent stocks in the Hang Seng Technology Index have withdrawn more than 80%, while cheap valuations can well meet the stock selection criteria of its undervalued investment strategy.

In this regard, Chiu Tung-jung also talked about his views in a daily live broadcast:

Over the past year or so, we have always believed that the investment opportunities for Hong Kong stocks are structural, mainly by buying more companies with low valuations, such asCoal and oil banks, mobile operators。

However, since the second half of last year, Hong Kong stocks have fallen sharply, especially after the further decline of the Internet this year, the whole valuation has reached the level of systematic undervaluation, not just the value stocks we like before.Even many companies in the Internet, medicine, technology, consumer and other growth stocks are priced very cheaply, and many companies with ten times or even individual valuations abound.

The point is, these companies are not only cheap but also good, but also the most important companies in all industries. Even the best companies in the Chinese economy are listed on Hong Kong stocks.

This excellence consists of two aspects.

First, traditional central enterprises and even red chips (including energy, banks, mobile operators, the first batch of companies listed in Hong Kong stocks) are the backbone of China's traditional economy, with very low operational risk and strong profitability. basically belong to the lowest-risk category of assets in the traditional economy.

Valuations of these companies are also cheap, probably the cheapest since 2005 in terms of risk premium. Many companies' valuation is only a few times the PB, only less than 5 times or even three or four times the PE, even the dividend yield is as high as more than a dozen points, the attraction is very strong. They are cheap not because they are not good, they are very good.

Another type of company，Even the emerging powers of the Chinese economy, represented by the Internet, medicine and technology, are also very attractive.

Under such circumstances, we believe that the opportunities in the market are comprehensive. Valuations are very cheap for both traditional and new economy companies.

Hong Kong stocks have been a big bear market for a long time. This actually creates excellent investment opportunities for low-valuation strategies and value investors, allowing us to buy very low-valued and very safe assets, and even good cash flow and dividend yields, plus good growth. This is what we think is a perfect combination and structure.