Source: Finance Association
The Hong Kong stock market was adjusted recently, but Guotai Junan Securities pointed out today that by observing recent market adjustments, Hong Kong stocks are more resilient than A-shares. Among them, the industries with the highest performance are media, petroleum, petrochemical, and communications.
At the general market index level, the Shanghai Composite 50 Index is still 4.1% from the end of October 2022, while the Hang Seng Index is still 16.9% away; the Shanghai and Shenzhen 300 Index has now reached the end of October 2022, while the Hang Seng Technology Index is still 28.4% away. Therefore, from the perspective of the general market index, Hong Kong stocks are more resilient than A-shares.
At the sector level, there are many industries where Hong Kong stocks are still rising compared to the end of October 2022, and the average increase is greater than that of A-shares. The industries with the highest increases were media, petroleum, petrochemicals, and communications. Looking at AH comparison, the average increase in Hong Kong stocks in the industry was 20.3%, and A-shares were 12.1%. Among the declining industries, the average decline in Hong Kong stocks was 10.5%, and A-shares were 11.3%.
Why is the Hong Kong stock market more resilient?
Guotai Junan Securities explained that it is mainly supported by three factors: better performance and profit expectations, high dividends, and undervaluation, and that resilience may continue in the future.
Weighted stocks in the Hong Kong stock media sector reported year-on-year revenue in 2023 and profit expectations for 2024 were higher than those for A-shares weighted stocks.
“Three Barrels of Oil,” a weighted stock in the petroleum and petrochemical sector of Hong Kong stocks, relies on the two major advantages of high dividends and undervaluation, and the stock price shows that it is more resilient than A-shares.
The three major operators in the Hong Kong stock communications sector also rely on the two major advantages of high dividends and undervaluation. Therefore, behind the resilience shown by the Hong Kong equity sector is supported by performance and profit expectations.
In addition to this, in terms of high dividend-related sectors (energy, communications), Hong Kong stocks have two major advantages over A-shares, higher dividend rates and lower valuations, and these two major advantages will not change over a long period of time, so the resilience of Hong Kong stocks may continue in the future.
What do you think of the fourth quarter?
Guotai Junan Securities pointed out that the following three factors jointly boosted Hong Kong stocks. First, there is a marginal improvement in Hong Kong stock earnings; second, US debt may peak according to the “M” pattern and fall back in the medium term; finally, Sino-US relations may have a window for improvement in November.
What to buy when Hong Kong stocks rebound?
Guotai Junan Securities pointed out that short-term overseas liquidity improved marginally. During the rebound period, growth was the main focus, focusing on the Hong Kong stock Hang Seng Technology Index, as well as Internet retail, innovative drugs, semiconductors, and gold. We will continue to embrace high-dividend assets in the medium to long term, and are optimistic about high-dividend varieties with high stability, such as telecommunications operators, petrochemicals, and utilities.
Editor/Jeffrey