Famous funds managing A-share products have begun to taste the performance benefits of cross-border positions, which has led many A-share funds to heavily increase their holdings of Hong Kong stocks.
With the continuous increase in the number of active Hong Kong stocks, the number of public fund Hong Kong stock holdings as of the end of June has increased to 65, and the inclusion of Hong Kong volume has become an important source of performance contribution for many A-share funds, thereby stimulating more and more fund managers to expand their investment ability circle to Hong Kong stocks.
At the same time, compared with the premium characteristics of the current popular dividend stocks in A shares, the dividend stock attributes reflected by the declining growth stocks in Hong Kong stocks also conform to the investment preferences of many A-share fund managers.
The increase in Hong Kong stock holdings is contributing to the performance of A-share funds, and fund managers are constantly expanding their investment circle into Hong Kong stocks.
Hong Kong stock positions are becoming one of the winning factors for A-share fund performance and ranking this year.
Fu Pengbo, the manager of Ruiyuan Growth Value Hybrid Fund, disclosed that he has included several Hong Kong stocks in the top ten heavy-weighted stocks as of the second quarter of this year. As of the end of June this year, the proportion of Hong Kong stock positions held by Ruiyuan Growth Value Hybrid Fund has reached 23.63%, while the proportion of Hong Kong stock positions held by the A-share funds managed by Fu Pengbo only has 16% in June last year.
The logical operation of continuously expanding the investment circle of famous fund managers in A-share fund products and constantly crossing over to the Hong Kong stock market largely comes from the reality that Hong Kong stocks are too cheap, especially among the newly included heavy-weighted Hong Kong stocks, a considerable part of which have privatization expectations due to their low stock prices and phenomena of institutional investors taking over. Of course, the contribution of Hong Kong stock positions to the performance of A-share funds may be the real logic.
Fu Pengbo stated in the latest second quarter report that the portfolio of the fund has been adjusted, and the proportion of the top ten holdings of net value has increased compared to the first quarter. Among them, there was more increase in individual stocks of machinery, power equipment, and energy industries, and some reduction in holdings of telecommunications operators, but the changes were limited, and the holdings of other key companies remained almost unchanged.$HYGEIA HEALTH (06078.HK)$As an example for buying top ten core stock pools at the end of June this year, according to the document disclosed by HKEx on June 26th, Fidelity International increased its holdings in Hygeia Healthcare by buying at a unit price of 30.3388 Hong Kong dollars on the exchange on June 20th, and increased its latest number of holdings from the previous 31.0792 million shares to 31.8078 million shares, with a good warehouse ratio rising from 4.92% to 5.04%, which actually constitutes the behavior of "holding up".
Fu Pengbo significantly increased the Hong Kong stock position in the core stock pool, especially the target that had been "held up", which is consistent with another top fund manager Zhang Khoon's continuous increase of Hong Kong stock positions for A-share products, which favors the logic of choosing cheap targets that are likely to be privatized.$KHOON GROUP (00924.HK)$"At this time, the biggest risk facing long-term investors is actually the controlling shareholders no longer willing to share the future development achievements of the company with the circulating shareholders." Zhang Kun of E Fund explained in its latest second quarter report that the market is able to get a clear understanding of the valuation of some high-quality companies due to the pessimistic expectation, including the P/E and market value/free cash flow level, and it can be judged that patience is the most important thing at this moment, and the long-term return expectation of high-quality companies is considerable.
With Zhang Kun's logical showing that the valuation of privatization may be too low, he significantly increased the holdings of Hong Kong-listed companies at the end of the second quarter of this year, the latter of which has been discussed for privatization due to the dissatisfaction of the company's management team with the low stock price. Some private equity firms have been studying the privatization transaction of Samsonite, which is listed on the Hong Kong Stock Exchange, and plan to acquire the company and then relist it on other securities trading markets such as the United States at higher valuations. The review is still ongoing and it is uncertain whether Samsonite will decide to push the transaction. Or it may imply the same consideration as the Hygeia Healthcare which was held by Fu Pengbo heavily in the end of June, and Samsonite also became the tenth heavy-weighted holding stock of high-quality enterprise under E Fund at the end of June this year, with a position percentage of 5.15% in this A-share fund product managed by Zhang Kun.
Public Hong Kong stock heavy holdings have increased to 65, and some famous A-share fund managers have also switched half of their positions to Hong Kong stocks.$SAMSONITE (01910.HK)$The contribution of the Hong Kong stock market to the performance of fund products this year has continuously attracted fund managers to increase their layouts, and some public well-known fund managers even allocate about half of their positions to Hong Kong stocks.
Star fund manager Xiao Nan, who traditionally prefers an A-share hold position strategy, has significantly increased the proportion of his Hong Kong stock positions in the E Fund High Quality and Strict Selection Fund he manages. At the end of the first quarter of this year, the Hong Kong stock position ratio of this A-share fund giant was only 15.66%, but by the end of June this year, Xiao Nan's A-share fund had already exceeded 25% of its Hong Kong stock position. While the Hong Kong stock position increased by about 10 percentage points, the Hong Kong-listed company also became the largest stock in this A-share fund.
Qu Yang, vice president and star fund manager of Qianhai Kaiyuan, highlighted the "Hong Kong inclusion" of related A-share products to a large extent during the second quarter. According to the second quarter report of Qianhai Kaiyuan Juyi Fund, as of the end of June this year, the proportion of Qu Yang's holding of Hong Kong stock through this product had reached 46.06%. This means that the Hong Kong stock color of this A-share product not only surpassed many public QDII funds, but also was very close to the Hong Kong stock position of Hong Kong stock theme funds. Obviously, all unconventional operations are based on performance comparison and ranking contribution. Against the backdrop of a 46% Hong Kong stock position, the A-share fund product that holds a heavy position in Hong Kong stocks is also the leading performance in the entire market of 10% among similar funds.
Even public FOF has begun to pay attention to the allocation proportion of Hong Kong stock components and Hong Kong stock theme funds when choosing fund products. The second quarter holdings disclosed by Penghua Yicheng Active FOF show that this FOF has greatly increased the allocation of Hong Kong stock theme funds on heavy positions, and as of the end of June this year, the proportion of Hong Kong stock theme funds in the position of this public FOF product has exceeded 16%. In addition, a FOF of Guotai Fund also increased the allocation proportion of Hong Kong stock fund products during the second quarter of this year. As of the end of June this year, the largest heavy position fund of Guotai Min'an Retirement FOF had been replaced by Hong Kong stock theme funds, and the proportion of relevant Hong Kong stock theme funds in the FOF had soared to 18%.
According to the research and analysis of institutions on public fund holdings, the proportion of public funds in Hong Kong stocks has rebounded significantly as of the end of June this year: among the heavy holdings of active equity public funds, Hong Kong stocks accounted for 11.52%, an increase of 2.25% from the previous period. In the heavy holdings of Q2 funds in 2024, the number of Hong Kong stocks in the top 50 and top 300 holdings is the same as that in Q1 2024; the number of Hong Kong stocks in the top 10 holdings has increased from 1 to 2; and the number of Hong Kong stocks in the top 100 holdings has increased from 5 to 6; the number of Hong Kong stocks in the top 500 holdings has increased from 47 to 65, indicating that although the Hong Kong stock market has fluctuations, the number of active individual stocks or the number of stocks with investment opportunities is increasing gradually.
High cost-performance ratio, Hong Kong growth stocks frequently stand out as dividend stocks
In many ways, the A-share star fund managers' cross-border Hong Kong stocks also reflect that when Hong Kong's growth stocks become value stocks or even dividend stocks due to continuous decline, this may indicate that the investment potential of Hong Kong stocks is gradually expanding.
Wang Shicong, manager of Southern China Emerging Economy Fund, believes that with the sharp increase in shareholder returns of Hong Kong growth stocks this year, such as dividends and buybacks, many Hong Kong growth stocks also have strong value attributes, not only in terms of valuation, comprehensive dividend yield and market popularity, but also have better growth, lighter asset, more healthy balance sheet, and the same "star-studded" industry pattern. We believe that the attractiveness of the new "value stocks" will gradually increase. In the past three years, the outflow of foreign investment has been a major factor affecting the capital market downturn in Hong Kong stock market. However, sufficient buybacks and dividends are expected to offset the impact of foreign fund outflows, making it one of the important victory or defeat hands for some individual stocks to reverse.
"The internet industry we are focusing on is in a very good condition, with stable growth and abundant cash flow. Leading companies continue to release profits and buy back shares. The resilience of such assets is still excellent. Another software SaaS asset we invest in, which is aimed at the IT spending of enterprises or small and medium-sized merchants, is indeed less resilient than the internet in contact with the C-end, which reflects certain performance pressure. However, with the gradual stabilization and recovery of economic prospects, we expect that these companies still have the potential for returns as time goes on," said Wang Guizhong, manager of Jiashi Fund.
Li Jianfeng, manager of E Fund, believes that the performance of Hong Kong stocks is worth expecting. After three years of adjustment, Hong Kong stock valuation has reached a historically low position. The lack of investor expectations has become an investment advantage. The essence of Hong Kong stock investment strategy is to find the fundamental errors of market pricing. From the distribution of investment opportunities, we can see not only the opportunity that the market is not pricing the future growth space of individual stocks fully, but also the cyclic opportunity of several industries that have seen the bottom clearly. Some industries with past growth, such as the internet and consumption, have entered a new stage of development. Not only does the valuation have better attractiveness, but the company also pays more attention to cost reduction and efficiency enhancement, and return to shareholders. Therefore, the value of configuration begins to increase significantly.
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