Source: Gelong Hui

After the two trading days of the year of the Rabbit rose in a row and Hong Kong stocks got off to a good start, Hong Kong stocks failed to continue their rally and fell collectively today (January 30).

In the afternoon, the decline continued to widen. As of press time, the Hang Seng Technology Index fell more than 5%, the Hang Seng Index fell 2.81%, and the State-owned Enterprises Index fell 3.72%.

Large-scale technology stocks fell across the board. BABA, Bilibili Inc. and Tencent fell by more than 6%, XIAOMI by more than 5%, JD.com and Kuaishou Technology by more than 4%, and Baidu, Inc. rose by more than 1% against the market.

It is worth noting that Tencent shares lost the HK $400 mark today, but brokers collectively adjusted the price tag, and Guosheng raised Tencent's target price to HK $500, reiterating its "buy" rating.

On the market, tourism, film and television entertainment, catering and other major consumer stocks fell collectively, semiconductor stocks fell to the front, inner housing stocks, property management stocks also fell.

Among them, duty-free leader China exemption fell by more than 12%; film and television stocks happy media fell by more than 12%, BABA Film fell by more than 10%, Cat's Eye Entertainment fell by more than 9%, catering leader 99% fell by more than 9%, and Haidilao International Holding and Lianfu fell by more than 6%. Semiconductor stocks Semiconductor Manufacturing International Corporation and Hua Hong Semiconductor fell more than 4%, while Shanghai Fudan fell more than 3%.

What happened?

On the one hand, the recovery trend of mainland consumer stocks during the Spring Festival is obvious, but with the release of the positive, a sharp correction today.

However, the CICC report said that during the Spring Festival holiday, the number of tourists and income in the mainland returned to post-epidemic highs, with some bright spots such as tax exemption and high-quality destinations. Overall, the mainland showed a faster recovery rate and good momentum after the rapid peak of infection than overseas, and is optimistic that social service consumption will further recover to the pre-epidemic level.

In terms of real estate stocks, Kerry real estate research data show that although the third and fourth lines are beginning to return home, the property market is generally difficult to reverse the decline in transactions, which fell 14% this year compared with the same period last year, and is still down more than 30% compared with 2019 before the epidemic. Although the first-line Spring Festival weekly trading volume dropped by 72% compared with the same period last year, it is still significantly better than the same period in 2021 and 2019. The performance of second-tier transactions was slightly inferior, with only 71000 transactions in nine typical cities during the Spring Festival week, down 86% from the previous month and 28% from the same period last year. The third and fourth lines have "turned red against the trend" and are beginning to return to their hometown to buy homes. 28 third-and fourth-tier cities have dropped 61% month-on-month.

Some industry insiders said that in 2022, both sides of the supply and demand of the real estate market are facing impact and pressure, the data indicators continue to deteriorate, and the short-term recovery of the market is under pressure.

There is another piece of news that disturbs the market. According to media reports, the United States, the Netherlands and Japan have reached a "secret agreement" to impose restrictions on China, but the three countries have not publicly announced the agreement, and the details are not clear.

This week, the Federal Reserve, the Bank of England and the European Central Bank will also announce the latest monetary policy. Cofco futures said it needed to be wary of the risk of a higher-than-expected rise in the dollar index. Including the market's expectation of readjusting the rate increases of the European Central Bank and the Federal Reserve during the Spring Festival holiday; on February 2, the European Central Bank or the Federal Reserve finally falsified their expectations; after the announcement of monetary policy, it is also easy to have "boots on the ground" and "good things change as much as possible" after the announcement of monetary policy.

The agency also said that at present, the Hong Kong stock market is gradually heating up under the resonance of internal and external advantages, and under the premise that the repair of expectations and overfalls constitute the main cause, we should pay attention to the possible disturbances between the repair of actual economic momentum and the expected derailment.

What do you think of the future of Hong Kong stocks?

After the successful opening, Hong Kong stocks are on the road of shock adjustment. As for the future trend of Hong Kong stocks, various major banks and institutions also hold different views.

On the one hand, Credit Suisse points out that after falling in the past two years, the market is becoming more and more interested in Chinese technology stocks. At the same time, the market is consistent with the ranking of the technology board industry, in the following order: hardware-prototype equipment manufacturers-software-semiconductors-infrastructure-Internet data centers.

The bank added that the key factors influencing the market's perception of the trend of technology stocks were the bottoming out of smartphone inventories, the drivers of demand recovery and the recent rebound. The bank noted that smartphone OEMs had cut capacity targets, but demand sentiment had improved and suggested cutting accessories to boost their profit margins, which could lead to potential quick orders in the second half of the year.

For semiconductors, the market is worried about US restrictions and is waiting for a cyclical bottom. The bank believes that power semiconductors / silicon carbide is one of the main themes this year, which can focus on profitable software companies. However, the bank believes that its valuation is reasonable and recommends waiting for a better entry time, when the visibility of demand will be clearer.

On the other hand, on Friday, Lyon published a report on quantitative strategies for the China market, saying that the Chinese stock market had rebounded strongly since October last year, but the bank believed that the MSCI China index faced a higher risk of correction in terms of market breadth.

The bank pointed out that by using the percentage of companies whose share prices are above the 200-day moving average as an indicator of market width, the data jumped from 5.4% to 83.3% in 13 weeks, reflecting a strong rebound in China's offshore stocks. However, when the market breadth was greater than 75 per cent, historical data showed that the average weekly return on the MSCI China index fell by 0.37 per cent.

CICC believes that the market will continue to rise amid twists and turns, and that changes in domestic economic growth policy and the policy path of the Federal Reserve are worthy of attention. Despite the lack of support for southbound capital inflows, the Hong Kong stock market remained strong during the Lunar New year holiday. If domestic fundamentals and corporate profits continue to repair, overseas capital is expected to return on a large scale in 2023.

In terms of allocation strategy, CICC recommends that investors pay more attention to high-quality growth (low PEG), such as consumption and real estate under policy optimization, Internet and health care repaired by expected reversal, and high-tech manufacturing. It is recommended to overallocate some information technology (software and semiconductors), media entertainment, optional consumption and services, as well as some health care and real estate, and maintain a cautious view of raw materials, industry, transportation, public utilities, etc.

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