Source: Securities Times Author: Roman

After more than 4 years of in-depth adjustments, the valuations of the most competitive leading individual stocks in various Hong Kong stock industries have fallen to a low level. Zhang Yidong, chief economist at Xingzheng International, said, “The Hong Kong stock market is expected to fluctuate upward in the next few quarters. Currently, this is the first phase of the Hong Kong stock market.”

Is the bullish market for Hong Kong stocks starting?

Recently, the Hong Kong stock market has continued to rise. Since April 19, the average daily turnover of the Hang Seng Index has been above HK$100 billion. Today, it has surpassed HK$200 billion. Liquidity of Hong Kong stocks has also improved as the market recovers.

The reporter interviewed a number of Hong Kong investment bankers and learned that they believe that foreign capital is currently flowing back into Hong Kong stocks, and short-term domestic and foreign investment resonance is driving the strengthening of Hong Kong stocks. Currently, the Hong Kong stock market has only just begun. It is in its first stage. This year's Hong Kong stock market is at least quarterly or even annual. Compared with developed markets such as US stocks, Hong Kong stocks are currently more cost-effective, so it is recommended to actively expand the Chinese stock market.

Since April, US bond yields have fluctuated at a high level, suppressing highly valued assets such as the US and Japan, but this has not raised concerns about global systemic risk. Overseas institutional investors are now willing to look for more cost-effective opportunities, return to the “depression” of Hong Kong stocks, push for short positions in Hong Kong stocks, and thereby attract domestic investors to increase their positions.

Zhang Yidong believes that the driving force of the second phase of the Hong Kong stock market will be an improvement in core asset fundamentals. The relative momentum of the Chinese and US economies in the second half of the year was more favorable to Chinese assets, thus attracting more domestic and foreign investors to increase their holdings of Hong Kong stocks.

“In short, the key to the sustainability of this round of the Hong Kong stock market is the continuity of China's economic improvement. Once the short-term market fluctuates due to mood swings, it is a good time to allocate core assets for Hong Kong stocks at a low point.” Zhang Yidong said.

However, a bullish market does not mean an all-round “crazy bull,” and not all stocks can rise. Zhang Yidong believes that the core assets of Hong Kong stocks in the new era focus on fields such as the Internet, consumption, overseas industrial chains, and advanced manufacturing.

Nuggets' core asset with a high win rate

Today, the Hong Kong real estate construction industry led the way. By the close, the increase was close to 4%. Ocean Group rose as high as 46.15%, Xuhui Holdings and Agile rose more than 20%, and Shimao Group, Vanke, and South China City rose more than 10%.

Zhang Yidong said that the “poor expectations” of Hong Kong stocks this year could repair high-dividend assets of Hong Kong stocks, which have a lot of momentum, and may be the real estate industry chain. Currently, the real estate policy side has begun to comprehensively study the issue of how to remove inventory. Once inventory removal is promoted, then real estate, properties, non-ferrous metals, construction materials, etc. related to the real estate industry chain may all exceed expectations.

Investment bankers told the reporter that the Hong Kong stock market is expected to spiral up this year. Currently, the Hang Seng Index stands at 19,000 points. After the sharp rise, there may be fluctuations in June and July. The bear market mentality formed over the past few years has made the improvement in risk appetite in Hong Kong stocks not happen overnight. And when the market becomes repetitive, high-yield stocks may be more popular for capital.

According to the reporter's statistics, there are currently 56 of the top 100 stocks with a dividend ratio of 3% or more in the total market capitalization of Hong Kong stocks. Most of the high-yield stocks are concentrated in finance, energy, real estate, and utilities.

Investment bankers explained that if you add the repurchase amount and the comprehensive return brought about by the increase in net profit, Tencent is definitely at the core of the core assets.

In particular, it is worth mentioning that the continued net inflow of capital to the south has become a leading force in the revaluation of high-yield shares, and has gradually gained pricing power. Take central state-owned enterprises with high dividends as an example. The share of Hong Kong Stock Connect shares is increasing year by year. Compared with the same period in 2023, the Hong Kong Stock Connect shareholding ratio of central state-owned enterprises represented by telecom operators, banks, and energy has all increased.

Zhang Yidong said that in the new era of high-quality development, high growth in traditional fields will become scarce due to the switching between old and new kinetic energy and the deceleration of old kinetic energy. Areas with high performance certainty are mainly in fields related to new quality productivity. The Hong Kong stock IPO market is expected to recover in 2024, so it is recommended to patiently explore new technology-related stocks.

edit/lambor