Hong Kong stocks have rebounded sharply since the beginning of November, with the Hang Seng index rising about 25 per cent from the low of the rally.

This is in sharp contrast to the performance of Hong Kong stocks before November this year.

Since the beginning of the year, the sharp adjustment in Hong Kong stocks once made mainland investors suspect that foreign investment may not come back, but with the recent sharp rebound in the market, can not help but ask whether foreign investment has returned?

After all, foreign investors still have a strong influence on Hong Kong stocks. Xingzheng Zhang Yidong said in a recent report that southward capital holdings accounted for only 5.7 per cent of Hong Kong shares outstanding, while overseas institutional investors accounted for 23.3 per cent, and this figure may be underestimated.

In a report on November 14th, Guojun analyst Dai QingSystematically combing the latest flows of southward capital, Hong Kong stocks and northward capital, it is found that foreign investors are "moved", and the optimization of epidemic prevention policies has indeed alleviated their inner anxiety, but they are still worried about the economy as a whole, especially real estate cars.

Specifically:

01 multiple positive resonance led to a strong rebound in Hong Kong stocks, while the proportion of short selling fell sharply

In his report, the monarch mentioned three advantages that led to a strong rebound in Hong Kong stocks:

1) the domestic epidemic prevention and control measures have improved, and the market is more optimistic about the economic outlook.

2) US inflation data are lower than expected, market expectations for liquidity reversal are rising, and risk-free interest rates are falling.

3) as the market warms up, the proportion of short selling in Hong Kong stocks has dropped rapidly from a peak of nearly 25% in October to 14.1% on November 11.

Summing up last week's performance, the king saidThe joint improvement of the denominator and denominator end of the Hong Kong stock market pushed up the rebound of the Hong Kong stock market.

Last week, the Hang Seng Index rose 7.21%. In terms of industry, almost all industries closed higher.His Chinese monarch wrote:

The weekly performance of real estate was the best (11.88%), mainly due to the news from Bank of China Ltd. Dealers Association on November 8 that it would continue to promote and expand the bond financing tools of private enterprises to support the bond financing of private enterprises, including real estate enterprises.

The materials industry (10.37%) not only benefited partly from the real estate industry chain, but also benefited from the expected slowdown in interest rate increases in the United States; the economic outlook improved slightly, with rising oil and metal prices driving the overall performance of the industry.

Industries that have also benefited from the rebound in overseas liquidity in midweek are hardware (6.42 per cent) and semiconductors (6.20 per cent).

Although the auto and parts industry benefited from the rebound in overseas liquidity, it still recorded the worst weekly performance (- 1.22%), mainly due to a month-on-month decline in new energy vehicle sales in October. In addition, Tesla, Inc. announced a disguised price cut, and the market is worried about the future of the industry.

02 southbound funds: substantially increase positions in Hong Kong stocks, favouring the direction of "oversold plate" and "steady growth"

Guojun said that at present, the performance price of Hong Kong stocks is still high, and the long-term allocation value is attractive. Improvement in overseas liquidity and improvement in superimposed domestic policiesSome of the foreign capital returned to the Hong Kong stock market, and at the same time, we also saw the continued inflow of southbound capital.

In terms of inflow into the plate, according to Guojun data:

The total amount of southward net flows to the top five industries is about HK $34.65 billion.，Focus on software services(HK $14.323 billion),Pharmacy(HK $8.998 billion),Real estate(HK $4.633 billion),Automobiles and parts(HK $3.714 billion)And retail.(HK $2.982 billion).

The total amount of southbound net capital flows to the top five sectors is about HK $34.65 billion.

03 foreign investment in Hong Kong stocks: pay more attention to epidemic situation optimization and liquidity-sensitive industries

The king found outThere are still differences between Hong Kong stocks and southward capital in the allocation of industries, which pay more attention to epidemic policy optimization and liquidity-sensitive related industries, but still have doubts about the direction of "steady growth", selling real estate and cars, and so on.

1) the top five industries with foreign capital inflows from Hong Kong stocks were consumer services (HK $2.561 billion), technical hardware and equipment (HK $2.089 billion), transport (HK $731 million), energy (HK $613 million) and health care equipment and services (HK $315 million).

2) the top five industries with capital outflows were real estate (- HK $6.171 billion), pharmaceuticals (- HK $5.911 billion), software and services (- HK $5.39 billion), insurance (- HK $4.557 billion) and cars and spare parts (- HK $3.223 billion).

The report concluded thatDomestic epidemic prevention and control measures have been optimized, and foreign investors have valued the rebound in the consumer service industry, but concerns about the domestic economy have not been completely eliminated, especially about the prospects of the real estate and automobile and parts industries.At the same time, the phased relaxation of overseas liquidity has made foreign investors in Hong Kong pay attention to liquidity-sensitive industries such as technical hardware and equipment, health care equipment and service industries.

04 the similarities and differences between foreign capital and domestic capital

Guojun also summed up the similarities and differences between foreign and domestic investment since November.

Common groundAll agree with the logic of epidemic repair.

Divergence: doubt about the direction of "steady growth".

Specifically, since November, both foreign capital and southward capital have flowed into industries such as retail of food and major supplies, health care equipment and services, telecommunications services, energy, consumer services and technical hardware and equipment; the industries that have flowed out are capital goods.

There are differences in other industries.Foreign investors in Hong Kong stocks sold real estate and cars, while southward funds bought heavily in the direction of "steady growth", mainly in real estate, cars and the Internet.

05 the similarities and differences of foreign capital in A-share and H-share markets

If you look at the northbound fund, the monarch saidNorthward capital as a whole is a net inflow, which is different from Hong Kong stock foreign investment in industry allocation, which tends to high-end manufacturing and financial industries.

1) the top five industries with northward capital inflows are materials (9.561 billion yuan), capital goods (4.364 billion yuan), consumer durables and clothing (3.496 billion yuan), banks (2.468 billion yuan) and health care equipment and services (1.198 billion yuan).

2) the top five industries with capital outflows are technical hardware and equipment (- 4.211 billion yuan), public utilities (- 3.476 billion yuan), real estate (- 1.662 billion yuan), food & beverage and tobacco (- 1.48 billion yuan) and pharmaceuticals & biotechnology and life sciences (- 1.364 billion yuan).

The net inflow of northbound capital into the top five industries totaled about 210.87 yuan.

The report also summarizes the similarities and differences between foreign investors in the A-share and H-share markets.

What they have in common is that they all agree on the optimization of epidemic prevention policy, and all buy the plates related to the optimization of epidemic prevention policy.Consumer services, transportation, health care equipment and services, etc.All are worried about "steady growth".All sell food and major supplies retail, real estate and pharmaceutical (vaccine-related), biotechnology and life sciences, utilities and other industries.

The difference is that：Foreign investors prefer "core assets" with the characteristics of the times, such as A-share high-end manufacturing, and Hong Kong stocks are more likely to buy industries with cyclical repair.

Finally, the king concluded that the optimization of domestic epidemic prevention and control measures and the increase of steady growth have alleviated the greatest worries of foreign investors. We have seen that foreign investors have returned, but their worries have not been completely relieved. From the point of view of capital flow, more foreign capital flows into post-epidemic restoration industries. However, as foreign concerns about the domestic economy have not been completely eliminated, foreign investors still have reservations and are still in a state of net sales to the real estate and automobile and parts industries.