Since 2021, Hong Kong stocks have made a good start, with the YTD Hang Seng Index up 5.99% (as of 2021-01-18), only one step away from the high point of the epidemic last year. More important than the point is the continued improvement in Hong Kong stock liquidity. Since the beginning of this year, the daily turnover of the Hang Seng Index has stood at more than 200 billion for many days in a row. With the reform dividend of the Hong Kong stock market and the release of liquidity dividend, the investment value of Hong Kong stocks has been highlighted.

As the open advantage of the global offshore market, Hong Kong stocks show a unique competitive advantage in the increasingly closed global market. The continuous listing of high-quality assets provides a large number of investment targets. Under the framework of interconnection, a steady flow of southward funds and loose US dollar international capital provide sufficient liquidity. Hong Kong stocks have entered a positive feedback cycle of "goods and money". At this moment, the allocation value of Hong Kong stocks must be examined again and again:

1. Asset shortage under global loosening

With the application of vaccines and rich experience in prevention and control, the impact of the epidemic on market sentiment has weakened, but the global economy is still in the shadow of the impact of the epidemic, the United States still maintains loose policies, and the dollar is still weak. risk appetite for equity assets continues to rise. In a loose context, global funds are actively looking for investment opportunities, and there are a large number of high-quality assets of RMB at the bottom of the Hong Kong stock market, and the free circulation of money has naturally become a favorite place for global funds.

2. Hong Kong stocks have obvious advantages in "performance-to-price ratio".

After three years of deduction of A-share core assets launched in 2018, A-share core assets have a significant moneymaking effect. Hong Kong stocks across a river still have certain valuation advantages, and at the beginning of the year, they were hit by the relevant policies of the United States. The valuation advantage is further magnified, and under the price comparison effect, the performance-to-price advantage of the Hong Kong stock market is highlighted.

3. The "second battlefield" of public offering funds.

With the growing maturity of the A-share market, institutions have become the main participants in the market. Public offering funds have achieved good excess returns in the past year, and beautiful performance has also brought advantages in issuance. In 2020, the number of public offering funds available through the Shanghai-Shenzhen-Hong Kong Stock Connect doubled from 739 to 1572, and the offering size tripled from 618.9 billion to 2.0912 trillion. As more and more A-share public offering funds participate in the Hong Kong market, the investment style of institutions in Hong Kong stocks will be further strengthened, and the value of high-quality assets of Hong Kong stocks will be further excavated.

4. southward capital inflows hit a new high.

Since the opening of the Hong Kong Stock Connect, southward funds have continued to pour into Hong Kong stocks, allocating the scarce hot capital assets of Hong Kong stocks, which has had a greater and greater impact on the market. the latest data show that southward capital inflows have exceeded 1.4 trillion yuan, becoming an increasingly important force in the Hong Kong market. Companies with southward capital inflows can better eliminate valuation discounts.

5. China's core assets gather in Hong Kong stocks

According to the list of China's top 500 listed companies, there were 11 companies with more than 1 trillion yuan in market capitalization as of December 31, with Tencent and BABA in the top two places for three consecutive years, both listed on Hong Kong stocks. At the same time, a large number of quality companies have chosen to list in Hong Kong, with 221 shortlisted companies with a total market capitalization of more than 40 trillion. Therefore, when investors are looking for investment opportunities in core assets, Hong Kong stocks must be included in the covered market.

6. Weather vane of Chinese science and technology stocks

Since the reform of the Hong Kong stock issuance system in 2018, XIAOMI and Meituan have been listed in Hong Kong stocks one after another. after 2019, technology giants such as BABA, JD.com, NetEase, Inc and other technology giants have also returned to Hong Kong stocks for secondary listings. In addition, technology giants such as Tencent and SMIC, which have been listed in Hong Kong for a long time, Chinese soft and hard technology giants have gathered together in Hong Kong stocks. Hong Kong stocks have become an important market for betting on China's high-quality technology assets, and Hang Seng Index companies have also timely released the Hang Seng Technology Index. Become a weather vane for Chinese science and technology stocks.

7. Hong Kong stocks are characterized by the scarcity of quality assets

Due to the flexibility of the Hong Kong stock issuance system, after years of accumulation, a number of unique scarce plates have been gathered in the Hong Kong stock market. for example, Macao's gambling plate, domestic real estate development and property leaders, major higher education groups and a large number of biotechnology companies have become important types of assets in the scattered and diversified allocation of investors.

8. Chinese stocks return to the release of dividends

Once, due to the restrictions of the issuance system, a large number of high-quality Chinese companies listed in the United States, with the reform of the issuance system in Hong Kong and the great changes in the regulatory system of US stocks, after the return of leading companies such as BABA, JD.com and NetEase, Inc, there are still a large number of US Chinese stocks expected to return to Hong Kong for secondary listing, and the return of more high-quality assets will further increase the attractiveness of Hong Kong stocks to global capital and continue to improve the activity of the Hong Kong stock market.

9. Hong Kong stock IPO market continues to be hot

2020 is the year of Hong Kong stock IPO. In the whole year, there are 144 companies listed on the main board, raising HK $359.503 billion. Compared with 2019, the number decreased by 12%, while the amount of financing increased by 26%. It can be seen that the quality of the IPO market continues to improve, at the same time, the market also has a very strong new money-making effect. Looking forward to 2021, there are still a large number of high-quality companies preparing to list in Hong Kong, and the Hong Kong new stock market is also worthy of continuous attention.

From the valuation, liquidity and other different dimensions, we can find a lot of tactical reasons to attach importance to Hong Kong stocks, but this is not the core logic of Hong Kong stocks.

If you take a long-term perspective and think about some long-term problems, you will find that the structural change of Hong Kong stocks is only from the move to the middle market, and even the former disadvantage has turned into an advantage, and the open offshore market with global participation. This setting is particularly scarce in the current framework of the global domestic cycle.As long as we maintain an open and inclusive system, embrace the world's high-quality assets and capital, move towards the positive feedback of "goods and money", and become a new liquidity hub, this is the long-term logic of attaching importance to Hong Kong stocks.

With the continuous popularity of the Hong Kong stock market, the discussion on the pricing power of Hong Kong stocks in the market begins to heat up again.

Looking back on the rapid Easter era in 2015, the Hong Kong Stock Connect, which had just been launched at that time, ignited investors' enthusiasm for Hong Kong stocks, showing a comprehensive bull market of weight and small ticket performance. however, leverage-driven speculation without performance support is bound to calm down in the end.

Times have changed, the opening of funds for interconnection has reached the seventh year, the understanding of funds on the Hong Kong stock market is no longer the same as at that time, the composition of funds has also undergone tremendous changes, history will not repeat itself, but will always be strikingly similar.

It is inevitable for southward funds to compete for the pricing power of the Hong Kong stock market, but the structure and path are different from those in the past, paying attention to performance and high-quality assets.Looking for investment opportunities with the aesthetic appreciation of mature institutional investors is the proper way of thinking in this round of market.For most investors, it is enough to grasp the mainstream game of mainstream opportunities.