Source: Brokerage China Author: Chang Lou

The disclosure of Hong Kong stock annual reports peaked in late March. Among them, listed companies, which account for about 41.5% of market capitalization, will release their annual reports for the week of March 18, and 457 listed companies will release their annual reports for the week of March 25. Regarding this year's results, the research institute predicts that the overall profit of overseas Chinese stocks in 2023 is expected to increase by 11.5%, up from the 5% growth rate in 2022.

Driven by a series of internal policy measures such as expected performance and continued repurchases, short selling forces have clearly declined. In the first two months of this year, Hong Kong stock listed companies repurchased more than HK$30 billion, while southbound capital continued to flow into the Hong Kong stock market on a large scale. As of March 12, southbound capital had a net inflow of HK$56.496 billion for 19 consecutive trading days, driving the continued rebound of Hong Kong stocks.

The peak of the Hong Kong stock annual report season is here

March 13, Hong Kong stock$BOSS ZHIPIN-W (02076.HK)$The increase reached 20.77%. According to the company's announced fiscal year 2023 results, revenue was US$840 million, up 25.37% year on year; net profit was US$155 million, up 873.01% year on year.

With the increase in the disclosure of Hong Kong stock annual reports, overseas Chinese stocks have also entered the peak period of annual report disclosure. According to statistics from the 2023 Hong Kong Stock Annual Report performance disclosure date, annual report disclosure reached its peak in late March. Listed companies with market capitalization accounting for about 41.5% of the market capitalization will release their annual report results in the week of March 18, and 457 listed companies will release their annual report results in the week of March 25. Among them, companies such as Tencent Holdings, Pinduoduo, Kuaishou, CNOOC, and China Mobile disclosed it in late March.

Judging from the information already disclosed, there are many expectations about the results. According to Tonghuashun data, as of March 11, 709 Hong Kong stock companies released their annual reports for the 2023 fiscal year. Of these, 355 companies' net profit attributable to shareholders of parent companies increased year-on-year, accounting for 50.07%, mainly in the construction, clothing, and education services sectors.

“The overall profit of overseas Chinese stocks is expected to increase by 11.5% in 2023, up from the 5% growth rate in 2022.” Liu Gang, a researcher at CICC, believes that this is mainly affected by factors such as the improvement in macroeconomic fundamentals in 2023, the low base in 2022, and the continued improvement in profits of leading targets, which is higher than the unanimous expectations of the market.

Hong Kong stocks repurchased more than HK$30 billion in the first two months

March 11, Hong Kong stock$CIMC VEHICLES (01839.HK)$The announcement made a conditional cash offer to repurchase all issued H shares at HK$7.5 per share and voluntarily delist them from the Hong Kong Stock Exchange.

More than just CIMC vehicles, the data shows that in the first two months of 2024, 110 listed companies initiated repurchases, up 120% from the same period last year; the cumulative share of repurchases was 1,431 billion shares, and the total repurchase amount reached HK$31,422 billion, up 165.88% year on year from HK$11.818 billion in the same period last year.

In terms of industry classification, the Hong Kong stock software service industry had the highest number of repurchase companies and repurchase amounts in the first two months, reaching 17 companies and HK$14.996 billion respectively. Among them, Tencent Holdings ranked first with a repurchase amount of HK$9.825 billion. In the first two months of 2024, Tencent Holdings has repurchased shares 13 times, with a cumulative total of 34.11 million shares, with a repurchase amount of HK$9.825 billion. In the first two months of this year, Kuaishou has repurchased shares 36 times, with a cumulative total of 22.7792 million shares and a repurchase amount of HK$999 million. The Xiaomi Group also reached 30 repurchases in the first two months of this year, with a cumulative repurchase amount of over HK$1.8 billion.

The power of short selling is declining

Active repurchases of industrial capital have driven a decline in short selling power, which often also means that the market is about to reach an inflection point. For ordinary investors, privatization offers have brought opportunities for premium exits, which also has a positive impact on the overall liquidity of the market.

After a year, southbound capital continued to flow into the Hong Kong stock market on a large scale. As of March 12, there was a net inflow of southbound capital into the Hong Kong stock market for 19 consecutive trading days, with a total net inflow of HK$56.496 billion. The last large-scale continuous net inflow period was from March 8 to April 11, 2023. At that time, there was a net inflow of capital to the south for 22 consecutive trading days, with a total net purchase of HK$61,876 billion.

Since its low on February 1 this year, US stocks have collectively rebounded. The NASDAQ China Golden Dragon Index has risen 17.5%, while the Hang Seng Technology Index has risen by more than 20%. In the week of March 8, the net capital inflow to the south reached HK$17.1 billion, while in the week from March 11 to now, the Hang Seng Technology Index has increased by nearly 8%, while$ChinaAMC Hang Seng Tech Index ETF (513180.SH)$It also continues to be highly active in trading, with daily turnover exceeding 3.8 billion yuan at one point, leading many cross-border ETFs. Among the holdings, Ideal Auto once rose nearly 6% on the 13th.

BOC International believes that the recent volume rebound in Hong Kong stocks is mainly due to a recovery in external liquidity easing expectations, while under the impetus of a series of internal policy measures, short selling power has clearly declined. Internal and external sentiment has improved and converged, and bears' recovery amid high short selling sentiment has boosted the rebound of Hong Kong stocks.

“When capital flows fall back to a standard deviation of two times below the historical average, they often correspond to a rebound in the market afterwards.” According to BOC International Research, for example, April to July 2013, October 2019, and October 2022. This is the fourth time this signal has appeared, and there is a high probability that it will continue to rebound from the technical side of net capital flow. Driven by a series of factors such as improvements in the internal and external environment and compounding undervaluation, it is expected that the rebound in Hong Kong stocks will continue for at least the next few months.

edit/lambor