Since November, both A-shares and Hong Kong stock markets have rebounded sharply. Among them, the A-share Shanghai Index has rebounded by 6.7%, the Shenzhen Component Index has rebounded by 7.1%, and the ChiNext Index has rebounded by 6.2%. The Hong Kong’s Hang Seng Index has rebounded by 18%, whilst the Hang Seng Technology Index is 22.4%.
Obviously, the performance of Hong Kong stocks in this round of bullish momentum is far stronger than that of A-shares- this however is a very different logical change from the past.
This is likely to indicate that the certainty of the long-term investment logic of many sectors of China’s stock market, especially Hong Kong stocks, has been greatly improved.
Since November, the HK stock market has a good run of bullish momentum.
First, the visit of the German chancellor accompanied by 12 German heavyweights to mainland China, the major policy speeches made by Beijing, and , the United States Federal Reserve released a signal that the pace of interest rate hikes may slow down, hence stimulating the bullish momentum of global stock markets.
As of now, the best-performing sectors of A-shares are in the categories of real estate, food and beverage, non-ferrous metals, retail, media, home appliances and other industries. The biggest common feature of these industries is that they are related to big consumption.
Meanwhile, the weakest-performing sectors are electronics, communications, computers, national defense and military industries, etc., which correspond to the growth areas related to the policy direction that the market has been hyping up before.
Obviously, funds inflows are flowing in again -it has returned to the oversold cycle sector that is most directly affected by the epidemic and macroeconomic factors. In just a few short trading days, the industry style selection of funds has undergone several very drastic changes, from electronics to manufacturing, to medicine, and then suddenly to big consumption.
As a result, last week, the SSE 50 Index, which is a place where big blue chips are concentrated, rose by more than 2% as a whole. Among them, the overall increase of large-cap value stocks exceeded 3.5%, while the ChiNext of the growth track fell by more than 2%.
Hang Seng Technology also performed very well. A number of well-known Internet technology giants have rebounded by more than 30% this month. Among them, Tencent Holdings (HK:0700), Alibaba-SW (HK:9988), Meituan-W (HK:3690), JD-SW (HK:9618) rebounded by 28.7%, 14.7%, and 31% respectively and 31.3%, and Kuaishou even rebounded by more than 43%.
The net inflow of funds inflow from the mainland china in the October exceeded 100 billion yuan, which is the period with the most intensive net inflow in a rare stage in recent years. The Internet technology sector is the biggest beneficiary for this largest net inflow.
As of last week, the proportion of fund inflows from Beijing technology to technology stocks has reached 25%, this amount is far exceeding the proportion of the entire Hong Kong stock market by nearly 10%. In relative terms, this proportion exceeded the fund inflows into the healthcare industry by 3%. T
So, of all the heavyweights of tech stocks, why is Tencent’s rebound catching the attention?
In the past few months, Tencent has been under the pressure of various negative factors, resulting in continuous selling of its stock price, but recently it has also ushered in the most obvious changes in reversal factors, including changes in policy attitudes, suspension of major shareholders’ reduction of holdings, and funds inflow etc.
In fact, not only Tencent, but also many other Internet technology giants in Hong Kong stocks have recently experienced similar situations, such as Meituan and JD.com. This further caused the market to resonate with the expected change.
One of the reasons why Hong Kong stocks have been able to rebound the most is indeed related to the background that the valuation has been at the lowest level in the past 20 years due to its continuous oversold. When Tencent’s stock price was at its lowest, its PE even fell to single digits, and its PB was only about 2.5 times. As a heavyweight in China’s Internet technology field, this valuation level is already shocking.
In fact, the current valuation levels of many industries in Hong Kong stocks are at extremely low levels in history, such as property & construction, finance, medical care, consumption, industry, etc., especially the Internet technology industry, which has fallen to from the historical low point The oversold state is extremely serious.
At the time of the worst decline in October, the oversold ratio of Hong Kong stocks once soared to a high of about 28%, far exceeding the oversold level of any Hong Kong stock market bottom in history.
But now, things are very different.
The first is changes in epidemic prevention and control measures. The specific policies will not be detailed here. The overall surge of consumer stocks on Friday is the vanguard of the return of market funds. These affected large consumer sectors have been suppressed for too long and have only recently begun to recover.
There are many fields such as large infrastructure, home appliances, food and beverage, tourism economy, and even the automobile industry will bring strong benefits. The combined market size is huge.
Although the epidemic situation may change in the future, this will form a very strong market expectation in the short term. Under more scientific adjustments, including the recovery of revenge consumption pattern and the strengthening of macroeconomic data, it will also bring more to the market.
Second, liquidity changes. After the U.S. inflation data fell sharply last week, the Federal Reserve released a signal to slow down interest rate hikes, which sent global financial markets soaring in one fell swoop.
Among them, the Hong Kong stock market is an offshore market, but the main investment funds come from overseas, so it is more sensitive to overseas factors, especially the performance of U.S. stocks and the interest rate of U.S. bonds. It will also be the most obvious rebound force.
The third is policy changes. Stabilizing the economy and employment are the most important economic goals and tasks at present, among which stabilizing real estate and stabilizing expectations are important starting points. The recent real estate policy has begun to increase rapidly. On Friday, the “second pillar” to support the financing channels of real estate companies was released. The support scale exceeded 250 billion yuan. The 20 billion bond issuance quota of Longfor Real Estate was accepted for the first time, triggering the two major markets of A and Hong Kong stocks. Real estate stocks rebounded sharply.
Among them, there are also more than 20 real estate stocks in the A-share market directly. There are a lot of stocks that have risen by more than 30%, and they are too numerous to count.
A few days ago, a number of more important policies to support the development of the real estate market have been released again, which will continue to contribute to the recovery of the industry’s prosperity. It can be expected that for some time to come, real estate will contribute a lot to the market.
In terms of the supervision of the Internet platform economy, the current regulatory attitude has clearly changed from “anti-monopoly” to “healthy development”, emphasizing the role of the platform economy in “stabilizing employment”.
There are many other industries, such as the media, biomedicine and other fields, which have always been the focus of policy supervision, but they have also ushered in significant changes recently, and industry policies have frequently emerged, bringing confidence to investors.
Also as there are more and more overseas investment banks and domestic brokerage institutions have gradually turned bullish on the domestic stock market, and even began to increase their positions in Hong Kong stocks after real money, which shows that the market has actually voted in actual actions.
