Hong Kong Stock Connect has become one of the most important channels for capital inflows to Hong Kong stocks, and every time Hong Kong Stock Connect is adjusted, it has attracted much attention.
In September, the Hong Kong Stock Connect is about to undergo another adjustment. For the companies involved, it can be described as mixed.
According to the Hong Kong Stock Connect inclusion criteria, 28 stocks are expected to be included in the upcoming September adjustments.
This includes the one that just went on sale$LAOPU GOLD (06181.HK)$，$EASOU TECH (02550.HK)$,$AUTOSTREETS (02443.HK)$,$QUNABOX GROUP (00917.HK)$,$MARKETINGFORCE (02556.HK)$,$CHABAIDAO (02555.HK)$,$DEKON AGR (02419.HK)$,$DPC DASH (01405.HK)$,$SANERGY GROUP (02459.HK)$,$SUNSHINE INS (06963.HK)$,$ONEWO (02602.HK)$,$TIANLI INT HLDG (01773.HK)$,$DL HOLDINGS GP (01709.HK)$,$HAO TIAN INTL (01341.HK)$,$SINOPEC SEG (02386.HK)$,$MONGOL MINING (00975.HK)$,$EVERG VEHICLE (00708.HK)$,$K. WAH INT'L (00173.HK)$,$HANG LUNG GROUP (00010.HK)$etc.
The most notable of these is$BABA-SW (09988.HK)$.
Currently, as a stock listed for the second time in Hong Kong, Alibaba is still unable to enter the Hong Kong Stock Connect.
However, according to the company's May announcement, Alibaba is expected to complete the status change of its main listing in Hong Kong by the end of August.
If the conversion is successfully completed by the end of August, Alibaba will have dual major listings on the main board of the Hong Kong Stock Exchange and the New York Stock Exchange, and can catch up with September$Hang Seng Composite Index (800701.HK)$The regular adjustment time window will be implemented in September as soon as possible.
Alibaba is not the first stock to be included in the Hong Kong Stock Connect by changing its listing status.
Previously, Parkson China,$BILIBILI-W (09626.HK)$,$ZAI LAB (09688.HK)$,$ZTO EXPRESS-W (02057.HK)$At first, they were all listed for the second time in Hong Kong. Later, they all changed their listing status, and after becoming dual major listings in Hong Kong, they were included in the Hong Kong Stock Connect.
If there is an entry, there will be an exit. In the September adjustment, it is also expected that 31 stocks will be brutally excluded from Hong Kong Stock Connect.
Among them are$AGILE GROUP (03383.HK)$,$BEISEN HOLDING (09669.HK)$,$FRONTAGE (01521.HK)$,$CHINA KEPEI (01890.HK)$,$SINO-OCEAN GP (03377.HK)$,$LINMON MEDIA (09857.HK)$,$XIABUXIABU (00520.HK)$,$EDIANYUN (02416.HK)$,$EC HEALTHCARE (02138.HK)$,$MEDSCI (02415.HK)$etc.
Once these stocks are removed from Hong Kong Stock Connect, mainland investors holding these stocks can only sell them in one direction and can no longer buy them.
For some of these individual stocks, such as$XJ INTL HLDGS (01765.HK)$, Xiabuxiabu,$ALLI INTL ED LE (01563.HK)$As far as stocks are concerned, Hong Kong Stock Connect's share share is quite high. Once removed from Hong Kong Stock Connect, there is no doubt that it is a huge disadvantage.
Big data from LiveReport shows that in March of this year, the stock prices of 27 stocks excluded from Hong Kong Stock Connect fell by an average of 24% from March 4 to March 28, and the average trading volume shrank by 52%.
As soon as many of these stocks were removed from Hong Kong Stock Connect, the stock prices began to dive sharply.
“The first stock in the metaverse”$FLOWING CLOUD (06610.HK)$Excluding the first day, it plummeted by 30.77%, a record low.$GOME RETAIL (00493.HK)$Many other stocks fell by more than 20% on the same day.
It is enough to show that Hong Kong Stock Connect has gradually taken an increasingly important position in the Hong Kong stock market.
In terms of transaction value, Hong Kong Stock Connect has averaged a net inflow of HK$4.5 billion per day over the past 30 days.
Since this year, the total inflow of southbound capital has been 349.985 billion yuan, which exceeds the net inflow for the full year of 2023. If growth continues in the second half of the year, the total net inflow of southbound capital into Hong Kong stocks this year is expected to exceed HK$641.4 billion in 2020.
While the mainland places more and more importance on the Hong Kong stock market, policies are also unlocking more benefits to Hong Kong Stock Connect.
In April of this year, the Securities Regulatory Commission announced 5 measures to support Hong Kong's capital market. The main measures are to further expand and optimize the Shanghai-Shenzhen-Hong Kong Stock Connect mechanism and include REITs and RMB stock trading counters in Hong Kong Stock Connect.
There was another rumor later. The government is considering reducing the 20% income tax that mainland individual investors need to pay when investing in Hong Kong stocks through the Hong Kong Stock Connect to receive dividends to avoid repeated taxation between the two places.
Although the policy has not yet been implemented, during this year's two sessions, Hong Kong Securities Regulatory Commission Chairman Lei Tianliang also proposed lowering the dividend tax level for Hong Kong Stock Connect individual investors and lowering the entry standards for Hong Kong Stock Connect mainland investors.
For mainland investors, this will undoubtedly be another major benefit.
However, on the other hand, concept stocks on the Hong Kong Stock Connect List have also been accompanied by quite a bit of controversy.
For investors, Hong Kong Stock Connect can make investing in Hong Kong stock companies more convenient, but at the same time, Hong Kong Stock Connect has also brought in quite a few garbage companies that harvest chives. However, excluding some “bad guys” is certainly a major benefit for companies that can be included in the Hong Kong Stock Connect.
According to LiveReport big data, the stock prices of the 22 newly included Hong Kong Stock Connect stocks in March 2024 rose by an average of 3.61% from March 4 to March 28, and the average trading volume increased 269%.
After being included in the Hong Kong Stock Connect, the investor base can be expanded, and a steady stream of southbound capital can undoubtedly greatly increase capital liquidity, thereby supporting stock prices. In the past, the liquidity of many stocks basically increased significantly after being included in the Hong Kong Stock Connect.
At the same time, being included in the Hong Kong Stock Connect is also a recognition of the company itself.
Because if you want to enter Hong Kong Stock Connect, you need to meet many mandatory requirements such as market value, performance, and liquidity at the same time. In the eyes of many people, entering a Hong Kong stock company on the Hong Kong Stock Connect is equal to a high-quality company.
As a result, after many medium market capitalization companies are included in the Hong Kong Stock Connect, they may experience a “double hit by Davis,” and the stock price trend is very strong.
As far as Alibaba is concerned, its inclusion in the Hong Kong Stock Connect this time is also quite worthy of attention.
Taking Tencent, which is also the core technology stock, as a reference, the cumulative inflow of southbound capital from Hong Kong Stock Connect to about 220.428 billion yuan in the past 3 months, of which about 9 billion yuan net capital flowed into Tencent, while Tencent has increased by more than 20% in the past three months.
Once Alibaba is included in the Hong Kong Stock Connect, it will also receive a large inflow of capital, which is undoubtedly a major benefit for Alibaba today.
Editor/Jeffrey