Source: Broker China Author: Chen Ming
In the last 9 trading days, Hong Kong stocks have risen fiercely, and some low-priced stocks are also booming!
May 3, Hong Kong$Hang Seng Index (800000.HK)$It rose 1.48% and recorded nine consecutive gains.$Hang Seng TECH Index (800700.HK)$It rose 2.4%. In terms of individual stocks,$GOGOX (02246.HK)$Attracting investors' attention, the stock's volume surged, reaching 125% at its highest intraday increase. By the close, Kuaigou Taxi had risen 91.55% to HK$0.68 per share, with a market capitalization of HK$430 million.
So, what is the reason for the change in fast dog taxis? What is the reason behind this sharp rise in Hong Kong stocks?
Soaring all the way up
Today, the Hong Kong stock market continued to be strong. By the close, the Hong Kong Hang Seng Index rose 1.48% to record nine consecutive gains. The Hang Seng Technology Index rose 2.74%, and the insurance, retail, real estate, technology and other sectors showed strong performance. In terms of individual stocks,$BILIBILI-W (09626.HK)$An increase of nearly 7%,$WB-SW (09898.HK)$,$JD-SW (09618.HK)$,$KUAISHOU-W (01024.HK)$Up more than 5%,$XPENG-W (09868.HK)$,$NTES-S (09999.HK)$,$BIDU-SW (09888.HK)$,$BABA-SW (09988.HK)$Waiting for an increase of more than 4%. Insurance stocks also strengthened collectively.$PING AN (02318.HK)$An increase of more than 4%,$ZA ONLINE (06060.HK)$An increase of 3.9%,$CHINA LIFE (02628.HK)$up 3.7%,$CPIC (02601.HK)$increased by 3.4%,$CHINA TAIPING (00966.HK)$Up 3%.
This round of rising Hong Kong stocks began on April 22. Over the past 9 trading days, the Hong Kong Hang Seng Index has accumulated a cumulative increase of 13.9%, and the Hang Seng Technology Index has accumulated a cumulative increase of 21.15%. During this period, some low-priced stocks also changed collectively.$SENSETIME-W (00020.HK)$The increase reached 175.86%,$E-HOUSE ENT (02048.HK)$Up more than 137%,$SHIMAO GROUP (00813.HK)$,$GOME RETAIL (00493.HK)$The increase was also over 85%.
Fast Dog Taxi surged 125% in today's intraday session, hitting a high of HK$0.80 per share. At the close of trading, Kuaidou Taxi's gains narrowed. The stock price rose 91.55% to HK$0.68 per share. The full day's turnover was close to HK$150 million, and the latest market value was HK$430 million. This round of rising prices for Fast Dog Taxi also began on April 22. Over the past 9 trading days, the cumulative increase of Fast Dog Taxi has reached 176%, the highest increase among all Hong Kong stocks.
Kuaigou Taxi has continued to soar recently, which is related to the company's disclosed performance exceeding expectations. According to the recently disclosed annual report, in 2023, Kuaigou taxi revenue was 753 million yuan, down 2.6% year on year; gross profit was 258 million yuan, down 1.4% year on year; adjusted net loss during the year was 1.7 billion yuan, down 25.6% from the same period last year. The company's corporate business revenue reached 462 million yuan, accounting for 61.4% of the group's total revenue, exceeding market expectations. User engagement in the company's platform services continued to grow, and revenue from the value-added services division increased by 29.4%.
According to public information, Kuaigou Taxi is Asia's leading logistics platform in the same city. It was founded in 2014. Its predecessor was 58 Express, which belongs to the Arrive Group. It serves individuals, small and medium-sized enterprises, and large enterprises under the two brands “GOGOX” in Hong Kong and overseas markets, and “Fast Dog Taxi” in mainland China. The company operates in more than 370 cities, including mainland China, Hong Kong, Singapore, South Korea, India and Vietnam. According to Frost & Sullivan data, according to GMV in 2021, the company is the third largest logistics platform in the mainland, with a market share of 3.2%; the logistics leader in the same city in Hong Kong, with a market share of 50.9%.
In 2019, 2020, and 2021, Kuaigou taxi revenue was 550 million yuan, 530 million yuan and 660 million yuan respectively, mainly contributed by the three major business models of platform services, enterprise services, and value-added services. In 2022, Kuaigou Taxi achieved total revenue of 773 million yuan, an increase of 17% over the previous year.
As of December 31, 2022, Kuaigou Taxi had approximately 30.7 million registered shippers and 6.1 million registered drivers. As of December 31, 2023, the company had about 33 million registered shippers and 6.7 million registered drivers. In 2023, 23.1 million shipping orders were completed on the company's platform, resulting in a total transaction volume of 2,297 billion yuan.
Fast Dog Taxi was listed on the Hong Kong Stock Exchange on June 24, 2022. At the time, the issue price was HK$21.50 per share, but it broke off on the day of listing, falling by more than 22% on the first day. Since then, the company's stock price has dropped all the way down. By April 19 this year (the trading day before the start of this round), Kuaidou Taxi's stock price was only HK$0.246, down 98.86% from the issue price. The market value also fell from over HK$10 billion to HK$155 million.
Behind the sharp rise in Hong Kong stocks
Recently, the strong performance of Hong Kong stocks has become the focus of market attention. Since last Monday (April 22), against the backdrop of general weakness in peripheral markets, Hong Kong stocks have experienced a strong rebound after a long absence. Some brokerage analysts pointed out that this largely indicates that while the market is repricing the US monetary policy, it is also beginning to reprice the performance of the Chinese economy.
Liquidity has always been an important factor affecting the performance of the Hong Kong stock market. Since the end of January this year, the inflow of capital from the south into the Hong Kong stock market has accelerated markedly. This is an important reason why the Hong Kong stock market began to strengthen during the same period. Investors should have been very impressed by Southbound Capital at the beginning of 2021. The monthly inflow of Southbound Capital in January exceeded HK$300 billion, the highest since the data was available. However, capital inflows from the south continued to slow in the second half of 2021 and 2022 and 2023, and the Hong Kong stock market continued to recover since the beginning of 2022. However, net capital inflows to the Hong Kong stock market have accelerated markedly this year. The cumulative inflow for the first four months reached HK$213.5 billion, far higher than the data for the same period of 2022 and 2023. This is also an important reason for the recent strengthening of the Hong Kong stock market.
Furthermore, since the beginning of the year, favorable policies to optimize the cross-border connectivity mechanism and promote the collaborative development of the capital markets of the two places have been continuously implemented, further catalyzing the rapid rise in the Hong Kong stock market in the short term. On April 19, the China Securities Regulatory Commission announced 5 capital market cooperation measures with Hong Kong to further expand and optimize the Shanghai-Shenzhen-Hong Kong Stock Connect mechanism, help Hong Kong consolidate and enhance its status as an international financial center, and jointly promote the collaborative development of capital markets between the two places.
Huafu Securities pointed out that in fact, not only the Hong Kong stock market, but Chinese assets, including A-shares, have performed well recently, and the continued improvement of China's fundamentals is the core driving factor behind it. On April 16, the National Bureau of Statistics released economic data for the first quarter. Real GDP for the first quarter increased by 5.3% year-on-year, 0.1 percentage points faster than in 2023 and the fourth quarter of 2023. On April 30, the Bureau of Statistics released the latest April manufacturing PMI index of 50.4%, which has been in the expansion range for two consecutive months. Overall, China's economy is currently in a moderate recovery stage. Looking ahead, it is expected that the upward trend will continue in the future as the dynamic energy within the economy continues to recover.
On May 2, the offshore renminbi suddenly rose and broke through the 7.20 mark for a while. Meanwhile, the Hang Seng Index also surged yesterday and reached the 18,000 mark. After a period of “negative correlation,” there was a renewed resonance between Hong Kong stocks and the offshore RMB exchange rate, which also indicates to a certain extent that capital inflows into Hong Kong stocks have begun to become more diversified.
Cathay Pacific Jun An (Hong Kong) pointed out that the performance of the Hang Seng Index has shown a negative correlation with the RMB exchange rate since this year, that is, the Hang Seng Index has been rising, but the RMB exchange rate has declined. One explanation for this “divergence” is that the weakening of the RMB exchange rate is not due to its own fundamental reasons, but because the US dollar exchange rate has been strong since this year. At the same time, the upward force driving Hong Kong stocks since the beginning of the year has mainly been southward capital. These funds themselves are relatively less sensitive to the RMB exchange rate. Judging from yesterday's market, Hong Kong stocks surged, and the RMB also clearly strengthened. In addition, yesterday was a mainland holiday, and southbound capital was unable to participate in Hong Kong stocks. Combined with this information, it can be clearly seen that overseas investors should be a new force driving the rise of Hong Kong stocks.
Cathay Pacific Junan (Hong Kong) said that it remains to be seen how long this strength will last, but as far as the exchange rate itself is concerned, there are several concerns. First, since the RMB still has negative interest spreads against the US dollar, the bear recovery may drive the first wave of strengthening of the RMB. Second, the market will still look for some relevant currency pairs to observe, such as the exchange rate performance of the RMB against the Japanese yen. Third, investors in the stock market and exchange rate market are still related but not the same group. The outstanding performance of Hong Kong stocks since this year has ultimately boosted the sentiment of macro traders. This also seems to mean that the stock market is more likely to become a leading indicator at present. Overall, the sharp rise in offshore renminbi is good news for the market, which means that more investors are beginning to pay attention to the performance of Hong Kong stocks. However, until the US interest rate cut became more clear, Hong Kong stocks still seemed to be the prettiest with greater certainty.
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