Since mid-September, Hong Kong stocks have generally risen.

The Zhitong Finance App learned that since September 11, the Hang Seng Index has maintained an upward trend for 12 consecutive days, and the index has risen by about 21%. On September 27, the Hong Kong stock market also achieved record transactions. The three major indices continued to hit new highs during the year, with market turnover reaching HK$445.748 billion, a record high.

By the close of trading on the 27th, the Hang Seng Index had successfully reached the 20,000 point mark, up 3.55% or 707.72 points, a new rebound since this year, closing at 20632.3 points; pharmaceutical stocks, dairy stocks, Chinese brokerage stocks, and domestic housing stocks performed well.

It is worth mentioning that since mid-September, the Hong Kong Stock Exchange has accumulated a cumulative increase of nearly 33%; on the afternoon of the 27th, it also rose by nearly 10% to HK$305.6. The stock price hit a new high since August 2023, which fully demonstrates the attitude of capital, and market sentiment has rebounded markedly.

The Federal Reserve cut interest rates and a number of favorable policies “ignited” the general rise in Hong Kong stocks

Behind the “boom” in the market, it is inseparable from a number of major favorable policies, such as the recent Federal Reserve cutting interest rates by 50 basis points and domestic interest rate cuts.

Recently, the Federal Reserve cut interest rates sharply by 50 basis points. Also, according to the Federal Reserve's forecast, the US federal funds rate will reach 4.4% by the end of this year, the target range of 4.25% to 4.5%. It will drop to 3.4% by 2025, and is expected to drop to 2.9% by 2026.

In response, the analysis points out that as the Federal Reserve begins to cut interest rates and the monetary policy space of central banks is further opened up, the Fed's interest rate cuts will help mitigate capital outflows and exchange rate fluctuations from countries other than the US, and promote economic growth.

In a market environment with lower interest rates, lower capital costs will help attract more capital into the Hong Kong market, enhance market sentiment, and drive up the stock market.

Meanwhile, on September 24, People's Bank of China Governor Pan Gongsheng announced a number of major policies, including downgrades, interest rate cuts, and stock mortgage interest rates, etc., which attracted great attention from the market.

On September 26, the Political Bureau of the CPC Central Committee held a meeting. The meeting mentioned increasing countercyclical adjustment of fiscal and monetary policies, guaranteeing necessary fiscal expenditure, and doing a good job in the “Three Guarantees” at the grassroots level. Strive to boost the capital market, vigorously guide medium- to long-term capital entry into the market, and break through the blockages of funds such as social security, insurance, and financial management. It is necessary to support mergers, acquisitions and restructuring of listed companies, steadily push forward public fund reform, and study and introduce policies and measures to protect small and medium-sized investors.

On the 27th, the much-anticipated interest rate cut was officially implemented. The People's Bank of China issued an announcement to lower the deposit reserve ratio of financial institutions by 0.5 percentage points (excluding financial institutions that have implemented a 5% deposit reserve ratio); the 7-day reverse repurchase operating interest rate in the open market was adjusted to 1.50% from the previous 1.70%. The operating interest rates for 14-day reverse repurchases and temporary positive and reverse repurchases on the open market continue to be determined by adding and subtracting points to the 7-day reverse repurchase operating interest rate in the open market, and the margin of addition and subtraction points remains unchanged.

The number of repurchasing companies in 2024 hit a new high in recent years, and 123 companies are still buying back recently

Recently, sentiment in the Hong Kong stock market has picked up markedly, in stark contrast to the first half of 2024.

On September 24-26, the Hong Kong stock market achieved turnover of HK$242.3 billion, HK$254.8 billion and HK$302.9 billion respectively. On the 27th, it also surpassed HK$445.748 billion, a record high. Compared with the first half of 2024, the average daily turnover of the Hong Kong stock market was only HK$110.4 billion.

In the first half of this year, the Hang Seng Index had a cumulative increase of 3.94%. By the close of trading on the 27th, the Hang Seng Index had risen 20.4% from the opening price at the beginning of the year.

In the market, which was relatively sluggish and volatile before, many companies chose to repurchase the company's tradable shares. According to statistics from the Zhitong Finance App, since 2024, out of all 2,626 Hong Kong stock listed companies, about 239 companies have participated in the repurchase.

In comparison, in 2021, 2022, and 2023, the number of Hong Kong stock listed companies participating in the buyback was 186, 217, and 197, respectively.

It is worth mentioning that companies generally choose to buy back stocks with low absorption when the market is sluggish, and when the market is rising, they still choose to continue to buy back stocks, which just shows the management's confidence in the company's value and future development.

According to the Zhitong Finance App, in the few trading days since September 10, there are still not a few companies that have chosen to buy back the company's shares. Of the 239 companies that have repurchased since this year, 123 companies have continued to buy back the company's shares.

Among them, based on the cumulative repurchase amount since September 10, the five listed companies with the highest repurchase amounts were Tencent Holdings (00700), Meituan-W (03690), HSBC Holdings (00005), AIA (01299), and Kuaishou-W (01024). The repurchase amounts were approximately HK$10.718 billion, 3.229 billion, 2.294 billion, and HK$0.41 billion, respectively.

Since this year, the repurchase scale of the above five listed companies has reached HK$88.112 billion, 27.696 billion, 31.871 billion, 24.175 billion, and HK$3.944 billion, respectively.

In terms of industry distribution, among the top 20 companies with the highest repurchase amounts, the non-essential consumer industry is the industry with the most repurchases, followed by the information technology, finance, energy, and healthcare industries.

Furthermore, based on the ratio of repurchased shares to the tradable share capital, the five companies with the highest share of repurchased shares since September 10 were Corning Hospital (02120), Shenglong Jinxiu International (08481), Liankang Biotechnology Group (00690), China Xuyang Group (01907), and PricewaterhouseCoopers (01358), with repurchase ratios of 2.54%, 2.46%, 1.16%, 0.97%, and 0.95%, respectively.

Since this year, the shares repurchased by the above five listed companies have accounted for 7.06%, 6.68%, 3.22%, 2.77%, and 2.73% of the total tradable share capital, respectively. In terms of industry distribution, the healthcare industry accounts for the highest share of the top 20 companies, reaching 37%; the non-essential consumer industry is second, accounting for 21%.

Of all the 123 listed companies that have repurchased since September 10, the non-essential consumer sector accounted for the highest share, reaching 31 (25%); the healthcare industry was followed by 28 companies (23%); the finance, IT, and real estate construction industries had 11 companies (9%), 9 companies (7%), and 8 companies (6%), respectively.

It is worth mentioning that with the implementation of favorable policies such as lowering interest rates on stock mortgages, the collective strength of domestic housing stocks in Hong Kong stocks has recently strengthened. Meanwhile, during the period of strong performance in the Hong Kong stock market since September 10, companies such as Swire Properties (01972), Wanwuyun (02602), Yuexiu Services (06626), and Jinke Services (09666) are still buying back the company's shares.

A series of favorable policies expected by the market are “going hand in hand”, driving Chinese assets into a “booming” model. Morgan Stanley China recently stated in a research report that China's recent package of measures to stabilize the market is formally “unprecedented in the history of the Chinese stock market.” It is expected that both China's A-share and Hong Kong stock markets will respond positively to the policy, and there may be a tactical rebound in the near future, even outperforming emerging markets.

The current characteristics of the bottom of the Hong Kong stock market are once again showing. CITIC Securities has even made predictions, judging that the valuation repair market in the Hong Kong stock market is expected to continue until the beginning of November, while the growth style is expected to continue to outperform the dividend strategy.

However, with the arrival of a rise in the market, companies that are still repurchasing the company's shares deserve more attention.