Source: Zhitong Finance "Since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%)." With the rebound of the stock market, the old adage "Sell in May and Go Away" seems to have been a bad advice once again. Last month, the S&P 500 index rose 4.8%, the best May performance since 2009. The NASDAQ 100 index rose nearly 6.2%, and the NASDAQ Composite Index rose 6.9%. Goldman Sachs FICC & Equities Trading Division said: "History doesn't really support this saying. Don't sell, leave the market (go on vacation), and enjoy the good times." The rising trend is still to be continued? If history is any guide, it may indicate that the rise of the stock market is not over yet. Looking ahead to the rest of 2024, Scott Rubner, Managing Director of the Goldman Sachs Global Markets Division and tactical expert, pointed out the following historical background for investors. Rubner stated that the S&P 500 index has risen 10.7% year-to-date, and since 1950, the S&P 500 index has risen more than 10% 21 times as of the end of May. In about 90% of these cases, the S&P 500 index rose for the rest of the year. There were only two instances of declines for the rest of the year, in 1987 (-13%) and 1986 (-0.1%). "Since 1950, the median return of the last 7 months of each year (June 1 to December 31) is 5.4%. In the aforementioned 21 cases, the average performance of the last 7 months increased to 8.1%." Rubner added. Rubner also pointed out that the NASDAQ index has risen for 16 consecutive Julys, with an average return of about 4.64%.

Citibank Securities released a research report stating that the Hang Seng Index will welcome a new round of review results on August 16, and the adjustment will officially take effect on September 9. The corresponding adjustments will also be made to the Hong Kong Stock Connect. The bank expects that 20 symbols will enter the Hong Kong Stock Connect, of which the Information Technology, Consumer Discretionary, and Energy sectors have a higher weight of circulating market value. If they are successfully dual listed by the end of August, they may be included in the Hong Kong Stock Connect during the review.$BABA-SW (09988.HK)$Please use your Futubull account to access the feature.

The main points of the Citic Securities research report are as follows:

Preview of Hang Seng Composite Index and Hong Kong Stock Connect inclusion.

20 stocks are expected to be included in the Hong Kong Stock Connect, of which 9 are newly listed since the second half of 2023. After the Hong Kong Stock Exchange closes on August 16, 2024, the company will announce the semi-annual review results of the Hang Seng Index (from July 1, 2023, to June 30, 2024). The adjustment will officially take effect on September 9, and the corresponding list of Hong Kong Stock Connect will also be adjusted on that day. According to the latest screening standards of Hang Seng Index and Hong Kong Stock Connect, we predict that 20 new symbols will be included in Hong Kong Stock Connect, and the circulating market value threshold is expected to be about HKD 5.8 billion, of which 9 symbols are newly listed since the last review cutoff (June 30, 2023). Among the stocks expected to be included this time, the industries with higher weight of circulating market value are Information Technology, Consumer Discretionary, and Energy, which are predicted to be included with 6/3/3 symbols respectively, and the proportion of circulating market value is 41.5%, 14.3%, and 12.2% respectively.$Hang Seng Index (800000.HK)$As per our calculation, since 2019, the average excess return relative to the Hang Seng Index during the period from the announcement day of the Hang Seng Index to the effective date of the Hong Kong Stock Connect has reached 5.5% when the symbols are predicted to be included. However, the average excess return of the symbols that have been included in Hong Kong Stock Connect has decreased significantly in the 30 days after the effective date of Hong Kong Stock Connect, and the excess return relative to the Hang Seng Index since 2019 is only 0.2%. We found that during the period from the announcement day of the Hang Seng Index to the effective date of the Hong Kong Stock Connect in 2023, the average excess return of the included symbols dropped significantly to 0.8%. However, this is mainly due to the impact of the sharp rise in long-term US bond yields in the third quarter of 2023, which has led to the more likely suppression of the valuation of growth stocks. The excess returns of the newly included symbols have increased again at the beginning of 2024. Considering that the overall valuation of Hong Kong stocks is currently at a historical low and the space for capital outflows and market further decline is limited, we still recommend investors to pay attention to the timing opportunities between the announcement day of the Hang Seng Index and the effective date of the Hong Kong Stock Connect. In addition, as some arbitrage funds may have laid out positions before the effective date of the Hong Kong Stock Connect, and passive funds will adjust their positions at the end of the trading day on the day before the effective day (September 6), some symbols with poor liquidity may be affected by the adjustment funds.$Hang Seng Composite Index (800701.HK)$According to Citibank Securities, the circulating market value of instruments expected to be included in Hong Kong Stock Connect is expected to be about HKD 5.8 billion. The corresponding list of Hong Kong Stock Connect will be adjusted on September 9. Among the stocks expected to be included, 9 symbols are newly listed since the last review cutoff, with 6/3/3 symbols in Information Technology, Consumer Discretionary, and Energy industries respectively. The proportion of circulating market value is 41.5%, 14.3%, and 12.2% respectively.

Among the 20 symbols that are expected to be included in Hong Kong Stock Connect, broken down by industry, there are:

6 Information Technology companies:$MARKETINGFORCE (02556.HK)$,$QUANTUMPH-P (02228.HK)$,$QUNABOX GROUP (00917.HK)$,$IMOTIONAUTOTECH (01274.HK)$,$SANERGY GROUP (02459.HK)$,$EASOU TECH (02550.HK)$;

3 Consumer Discretionary companies:$AUTOSTREETS (02443.HK)$,$TIANLI INT HLDG (01773.HK)$,$LAOPU GOLD (06181.HK)$;

3 Energy companies:$MONGOL MINING (00975.HK)$,$DALIPAL HLDG (01921.HK)$,$SINOPEC SEG (02386.HK)$;

3 Industrial companies:$ZONQING LTD (01855.HK)$,$HAO TIAN INTL (01341.HK)$,$CALB (03931.HK)$;

2 Financial companies:$SUNSHINE INS (06963.HK)$,$DL HOLDINGS GP (01709.HK)$;

2 Medical Care companies:$CONCORD HC GP (02453.HK)$,$HEC CJ PHARM (01558.HK)$;

1 Consumer Staples company:$DEKON AGR (02419.HK)$.

If Alibaba-SW successfully converts to dual primary listing by the end of August, it may be included in the Hong Kong Stock Connect. According to the financial report released by Alibaba Group on May 14th, the company is expected to complete the conversion from secondary to dual primary listing by the end of August this year. According to the regulations for the inclusion of same-share different-rights stocks that convert to dual primary listing in the Hong Kong Stock Connect, the inspection date is the second Hong Kong stock trading day before the regular adjustment effective date for Hang Seng Composite Index constituent stocks after its conversion to primary listing (Alibaba’s announcement predicts the end of August 2024). Considering that the average daily market value of Alibaba-SWs for the past 183 days is HKD 147.18 billion, and the total turnover is HKD 45.71 billion, which has far exceeded the conditions for inclusion for same-share different-rights enterprises, we believe that if Alibaba successfully converts to dual primary listing by the end of August, it may be included in the Hong Kong Stock Connect. We tracked the ETFs that are currently linked to the Hong Kong Stock Connect and Hong Kong Stock Connect relevant indexes. If Alibaba can be successfully included in the Hong Kong Stock Connect, we expect an increase in passive funds of around HKD 4.03 billion (Alibaba-SW's average daily turnover since the beginning of the year is about HKD 3.7 billion). However, we should also pay attention to the risks if Alibaba fails to convert to dual primary listing by the end of August, and if the inspection date is different from our expectations.

Keep an eye on timing opportunities for adjustments in the Hong Kong Stock Connect.

Please note that there may be errors in the calculation. There may be risks from domestic policy implementation and lower-than-expected economic recovery, overseas central banks unexpectedly tightening monetary policy, and a further deterioration in US-China relations.

Investment strategy:

Editor / jayden