Tiān fēng zhèng quàn released a research report, stating that compared to the global market, Chinese assets still have high cost performance. Based on the expectation of gradual recovery and the prospect of gradual improvement in basic fundamentals, Hong Kong Concept stocks still have attractive valuations and high risk-return ratios. Internet leading companies have bright profit performance, and Hong Kong Concept stocks are still rebounding. We continue to pay attention to Hong Kong Concept stocks.

Tianfeng Securities' main points are as follows:

This week, the Hang Seng Index, Hang Seng China Enterprises Index, and Hang Seng Tech Index rose 1.99%, 2.39%, and 0.65%, respectively, and the Hong Kong stock market rose for two consecutive weeks. This week, the Hong Kong stock market financial ETF rose by 2.47% year-on-year, and the Hong Kong stock market Internet ETF remained flat. The offshore RMB exchange rate against the US dollar has fallen, closing at 7.1606 on August 16. Since Q1 24, the Hong Kong stock market bottom has continued to rise, and many internal and external factors resonated since late April, leading to a sustained surge in the market. The Hong Kong stock market slightly rose in May. In June, the overall performance was relatively strong, hovering around 18,000 points. Tiān fēng zhèng quàn released a research report, stating that compared to the global market, Chinese assets still have high cost performance. Based on the expectation of gradual recovery and the prospect of gradual improvement in basic fundamentals, we believe that Hong Kong Concept stocks still have attractive valuations and high risk-return ratios.

In terms of funds, the net inflow of Hong Kong stock Connect was about 15.2 billion yuan this week, with continuous inflows of southbound funds in the Hong Kong stock market, an increase of 1.24 billion yuan compared with last week. From a macro perspective, China's total retail sales of consumer goods in July was 3,775.7 billion yuan, a year-on-year increase of 2.7%, which was 0.7 percentage points faster than last month; it increased by 0.35% month-on-month. Key Hong Kong stock performance was outstanding. Alibaba (09988)’s overall revenue performance is relatively stable. During the 618 full cycle this year, Taobao and Tmall's transaction volume increased by 12.0% year-on-year, exceeding the average increase of comprehensive e-commerce platforms, expanding the advantage of the leading position of e-commerce. The total revenue of JD Group (09618) maintained a stable growth, and the net profit margin reached 5.0% for the first time, with a significant improvement in profitability. While Tencent (00700)’s income continued to grow steadily, its profit growth continued to surpass the income growth rate. Domestic game revenue reached a new high in recent years, mainly relying on the income growth of the Fearless Agreement and the incremental revenue brought by the new game Dungeon and Warrior: Origin (DNF mobile game) after it was launched this quarter. From the perspective of market valuation, as of August 16, Hang Seng Index's 12-month forward PE discount compared to the median value since 2019 was -1.7 standard deviations, which is approximately 10.2% of the historical percentile value since 2019; Hang Seng Index's forward PE discount compared to MSCI Global Index since 2019 came to -2.9 standard deviations, which was the 6.1% percentile since 2019; Hang Seng Index's equity risk premium was lower than the historical median by 1.4 standard deviations, which was approximately 80.9% of the historical percentile value.

In terms of overseas markets, on Friday, the US Bureau of Labor Statistics released data showing that the increase in non-farm payrolls in July was 0.114 million, the lowest record since December 2020, lower than the expected 0.175 million, and significantly lower than the previous value of 0.206 million (revised down to 0.179 million). In July, the unemployment rate rose by 0.2 percentage points from the previous month to 4.3%, a record high since October 2021, exceeding the expected 4.1%. Traders began betting on the possibility of a 50 basis points rate cut in September and predicted that this year's rate cut would exceed 110 basis points.

Recommendations:

1) Internet platforms: [Tencent], [Meituan], [Alibaba], [Kwai], [Pinduoduo], [Didi];

2) High elasticity targets: [Meitu], [Manbang];

3) New forces: [Li Auto Inc], [Xpeng];

4) New consumption: [Pop Mart], [Miniso], [Luckin Coffee];

5) Web3 fintech: [OSL Group];

6) Potential for benefiting from the reversal of the dilemma caused by policies [New Oriental], [TAL Education], and others.

Risks: US and European markets face continued interest rate hikes and high inflation rates; domestic epidemic rebounds risks; domestic economic growth slows down; and policy stimulus is ineffective.