① Many of Hang Seng Technology's major stocks have continued to rise recently; ② Institutions continue to underestimate the chances of a rebound in Hong Kong stocks; ③ Institutions suggest focusing on the growth value and revaluation opportunities of internet platforms, new consumption, and new power targets.
Hong Kong stocks experienced a sharp rise today, and the technology sector performed well. By the close, the Hang Seng Index had risen 2.06%, successfully breaking through and stabilizing above 17,000 points; the State-owned Enterprises Index rose 2.27%, a record high in nearly 5 months; and the Hang Seng Technology Index surged 3.43%.
Among individual stocks, trading of Shangtang Technology was suspended after rising more than 31%, and further announcements will be issued. KEEP rose 19.65%, Weimeng Group rose 13.3%, Bilibili rose 8.8%, and Kuaishou rose 8.15%. Furthermore, Tencent Holdings rose more than 3%, followed by Innovation and Wisdom, GDS, etc.
It is worth noting that the three major indices of Hong Kong stocks have been rising for 3 consecutive days, and many core technology stocks in Hong Kong stocks have been rising continuously recently. Tencent Holdings reaped five years above the half-year line, with a cumulative increase of more than 14% over the past five trading days, breaking through the annual line; Shangtang Technology's stock price increase hit a new high since November 8, 2022; Meituan reached a new annual level; and Kuaishou and Bilibili broke through the half-year line.
Among them, Shangtang Technology's increase was the most impressive. Today's increase ranked first among Hong Kong stocks. This week (April 22 to April 14, same below), it has surged 37.93%.
On April 23, during technical exchanges, the company released the new Japan-Japan 5.0 model, which had been anticipated by the market for a long time, fully benchmarking GPT-4Turbo.
An analyst at SDIC Securities pointed out in an April 24 report that this iteration of technical capabilities, Shangtang launched the 5.0 version of the Japan-Japan New Big Model. Using a hybrid expert architecture, the context window reached about 200K during reasoning, and comprehensively benchmarked GPT4-Turbo in terms of math, reasoning, and coding abilities.
Tencent Holdings, on the other hand, staged “Elephants Dance”, with a cumulative increase of over 13% this week.
According to the news, Tencent Holdings previously announced a HK$100 billion share repurchase plan. “DNF Mobile Game” (Dungeon and Warrior: Origins), which is exclusively represented and operated by Tencent, will also be launched on May 21, 2024. The game is based on the classic mobile game “DNF” (Dungeon and Warrior) IP, and currently has more than 1.8 million reservations on the TapTap platform
Open Source Securities said that as the leading IP product that users have been looking forward to for a long time, “DNF Mobile Game” is expected to bring considerable revenue and performance growth to Tencent after its launch. Analysts at Morgan Stanley pointed out that the first quarter of this year is expected to be a low point in Tencent's local game business, and the DNF mobile game to be launched in the second quarter will be a turning point.
Favorable policies release domestic and foreign institutions are optimistic about the rebound in underestimating Hong Kong stocks
Looking at Hong Kong stocks as a whole, in addition to good individual dividends, the introduction of favorable policies has further boosted Hong Kong stocks. On April 19, the China Securities Regulatory Commission announced 5 capital market cooperation measures with Hong Kong, including: a) easing the scope of eligible products for stock ETFs under the Shanghai, Shenzhen, and Hong Kong Stock Connect; b) including REITs in the Shanghai, Shenzhen, and Hong Kong Stock Connect; c) supporting the inclusion of RMB stock trading counters in Hong Kong; d) optimizing mutual fund recognition arrangements; and e) supporting leading companies in the mainland industry to go public in Hong Kong. Furthermore, the Shanghai and Shenzhen Stock Exchange also plans to solicit comments on the revision of the “Implementation Measures for the Shanghai-Shenzhen-Hong Kong Stock Connect Business”.
Huatai Securities said that the new regulations will help unblock the interconnection mechanism, introduce active capital into the Hong Kong capital market, and enhance liquidity. Specifically, there are currently 8 Hong Kong Stock Connect ETFs, with a total fund size of HK$191.5 billion. Hong Kong stock ETFs with an average daily asset size of at least HK$550 million over the past 6 months and the investment area is in Hong Kong. Under the new regulations, the number of Hong Kong Stock Connect ETFs may be expected to expand to 21, and the fund size to HK$245 billion
Ping An Securities said that the five capital market cooperation measures with Hong Kong have further optimized fund and stock interconnection, and ETF Connect will usher in expansion; REITs will be included in the Shanghai-Shenzhen-Hong Kong Stock Connect list, and the scope of fund exchange is expected to expand further; in terms of stocks, the RMB counter will be included in the Hong Kong Stock Connect, which is expected to drive the popularity of RMB counter transactions.
Tianfeng Securities also stated that it is concerned about the above measures to benefit the Hong Kong market and continues to underestimate the chances of a rebound in Hong Kong stocks. According to the agency's statistics, as of April 19, the Hang Seng Index's 12-month outlook PE discounted 1.9 standard deviations from the 2019 median, and is at the historical quantile value of about 5.2%; the Hang Seng Index has discounted 3.2 standard deviations from the MSCI Global Index median and is in the 5% quantile since 2019; the Hang Seng Index equity risk premium was 1.1 standard deviations higher than the historical median, at a historical quantile of about 75%. It is recommended to focus on the growth value and reevaluation of opportunities on Internet platforms, new consumption, and new power targets.
Guotai Junan released a research report saying that the new “National Nine Rules” in China's capital market will help investors focus on assets with lower valuations, more stable growth, and higher dividends. However, the Hong Kong stock Internet policy adjustments and valuation adjustments have been sufficient in the past few years. Stock prices are entering the batting zone, and opportunities for Chinese Internet companies can be examined from a longer-term perspective.
At the same time, UBS raised the Hong Kong stock market rating to “increase” due to the poor performance of Hong Kong stocks since this year, the increasing support for dividends from listed companies, and the potential recovery of the tourism industry. The agency also said that the consumer and internet industries account for a high share of the MSCI China Index. As consumption shows initial signs of recovery, the company's performance is expected to perform better.
Editor/Jeffrey