eucasinofreespinsnodeposit| Back to 19000! Are Hong Kong stocks completely branched?

Hong Kong people are going northward for consumption, and the market capital continues to flow southward. It must be admitted that Hong Kong stocks have been very proud since the beginning of this year.

Since the beginning of the year, the Hang Seng Index has risen nearly 15%, and the Hang Seng China Enterprises Index has risen more than 20%, making it an excellent performance in the global capital markets.

(source: Wind, data as of 2024 tick 5x16; index short-term ups and downs and historical performance are only for analysis and reference, do not predict future performance. )

An edge is an edge.EucasinofreespinsnodepositYes, what we care more about may be, is it a thorough support this time?

Why is it rising: low performance-to-price ratio is highlighted

The valuations of A-shares and Hong Kong stocks are still in a low range, and the RMB exchange rate is more stable compared with currencies such as the Japanese yen during the strengthening of the US dollar, so the domestic stock market is also favored by overseas funds.

Since the beginning of the year, a series of policies aimed at improving cross-border interconnection and promoting the common development of the capital markets of the mainland and Hong Kong have been implemented one after another. On April 1, 2024, the CSRC issued five capital market cooperation measures with Hong Kong, including relaxing the scope of ETF eligible products for stocks under the Shanghai-Shenzhen-Hong Kong Stock Connect, including REITs into the Shanghai-Shenzhen-Hong Kong Stock Connect, supporting the inclusion of RMB stock trading counters into the Hong Kong Stock Connect, optimizing mutual recognition arrangements for funds, and supporting mainland industry leading enterprises to list in Hong Kong.

From the perspective of foreign investment, the strong exchange rate of the US dollar switches between high and low, and the demand for additional allocation of Hong Kong stocks increases. Since October 2023, the Japanese market has become an important position for foreign investors to allocate the Asia-Pacific market, and the Nikkei 225 index has reached an all-time high. By contrast, liquidity in the Hong Kong market is relatively low and the Hang Seng index continues to pull back. Under the background of the recent strength of the US dollar index, the exchange rate of the yen has depreciated continuously, the attractiveness of Japanese stocks has declined significantly, and overseas funds have begun to distribute Hong Kong stocks in the Asia-Pacific market.

In terms of liquidity, the Federal Reserve kept interest rates unchanged on May 1, keeping the benchmark interest rate at 5% for the sixth consecutive meeting.Eucasinofreespinsnodeposit.25% to 5%Eucasinofreespinsnodeposit.50% range. The Fed announced that the rate of reducing its Treasury holdings will slow from the current $60 billion a month to $25 billion a month from June 1. The March meeting has hinted that a slowdown will be discussed this time, but the pace is still slightly higher than expected. Powell's speech was partial to the pigeon, eliminating the possibility of further interest rate increases.

Combined with economic data, after the release of the non-farm payrolls report in April, the market expects the Fed to advance its first interest rate cut from November to September, and the future shift in monetary policy is a high probability event, which is good for Hong Kong stocks to form a liquidity environment.

There is plenty of room for valuation repair, and technology stocks may continue to lead the market.

Looking back, the current round of inflows into Hong Kong stocks, especially foreign capital, may be dominated by transactional funds, mainly to avoid the recent pullback in US and Japanese stocks and the risk of the yen exchange rate. Since April 29, the Bank of Japan has begun to intervene in the exchange rate to control the depreciation pace of the yen, and the switching of foreign investment may slow down, and there may also be periodic differences and adjustment pressure for Hong Kong stocks.

But from a fundamental point of view, domestic real GDP grew 5.3% in the first quarter compared with the same period last year, 0.1% faster than in the fourth quarter of 2023 and 2023. On April 30th, the latest manufacturing PMI index released by the Bureau of Statistics for April was 50.4%, which was in the expansion range for two consecutive months. Generally speaking, at presentEucasinofreespinsnodepositChina's economy is in a moderate recovery stage, which is expected to support the earnings performance of Hong Kong stocks. We can consider the layout of Hong Kong Stock Connect 50ETF (159712).

According to Bloomberg data, Hong Kong stocks unanimously expect EPS to recover significantly from mid-late March in 2024. Among them, the information technology industry is a fast-growing industry, with a consensus expected growth rate of 23.1% and 20.1% respectively in 2024 / 2025. Hong Kong technology stocks are expected to repair their future profits.

From a valuation point of view, as of May 8, the CSI Hong Kong Stock Connect Technology Index PE was 29.51 times, ranking in the 32 per cent quartile of the past five years. Despite the recent rapid rise in the market, valuations have rebounded compared with the previous lows, but compared with the history is still in a lower position, there is more room for upward, the corresponding target can focus on Hong Kong stock technology ETF (513020), with strong flexibility.

On the other hand, SASAC updated the KPI of central enterprises on January 29th this year. In 2024, it increased the targeted indicators reflecting value creation on the basis of adhering to the "one profit and five rates", and "comprehensively promoted the market capitalization management assessment of listed companies" on the basis of previous pilot projects. The State Council's "New Nine articles" also emphasized "promoting listed companies to enhance their investment value".

At present, the AH premium is still at an all-time high, the bid of the central government of Hong Kong shares is catalyzed by the reform of state-owned enterprises, and the dividend yield is relatively higher. As of May 8, the dividend yield of the CSI Hong Kong mainland state-owned enterprises index was 6.63 per cent, ranking in the historical 81 per cent quartile, significantly higher than the 5.18 per cent dividend index of A-shares. Hong Kong state-owned enterprises ETF (159519) may be used as a long-term allocation.

Risk Tip: the above views are for reference only and do not constitute investment advice or commitment. If you need to buy relevant fund products, please pay attention to the relevant regulations on investor appropriateness management, do the risk assessment in advance, and buy the fund products that match the risk level according to your own risk tolerance. The above-mentioned funds belong to stock funds, and their expected returns and expected risk levels are theoretically higher than those of mixed funds, bond funds and money market funds. At the same time, the above-mentioned funds are index funds, which mainly adopt the complete replication strategy to track the underlying index, and their risk-return characteristics are similar to those of the market portfolio characterized by the underlying index. The fund has risks and needs to be invested with caution.