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Original title: “Sweep of assets” for southern funds, Hong Kong stocks and southern funds for three consecutive days, the net inflows of more than 20 billion investors question the logic of “pricing power”
There is still some controversy over how long the current influx of funds south may last and whether it will affect the central pricing logic of the Hong Kong stock market.
On January 20, net southbound inflow of funds exceeded HK $ 20 billion, marking the third day in a row that net purchases exceeded HK $ 20 billion. On that day, the Hang Seng Index was vibrating for the fifth consecutive trading day, rising 1.04%, while the Hang Seng Technology Index was up 5.28% with the help of south-facing funds.
However, on the other side of the mad influx of capital from the south, the market fell into a certain divergence. On that day, the Hong Kong Stock ETF reversed from the previous day’s uptrend and hit the intraday cap. Finally, it closed with a fall of 9.88%. Southbound 50ETF closed down 6.7%. The Shanghai Stock Connect ETF fell 5.6%, the Hang Seng ETF and the Hang Seng Index ETF fell more than 4%.
Behind the different trends, there seems to be some controversy in the market over whether surging funds to the south can shake up the existing valuation system for Hong Kong stocks.
Southbound capital continually “buys down” Hong Kong shares
“A shares are inflated, Hong Kong shares are cheap,” an investor who has been following the Hong Kong stock market for a long time told the reporter excitedly.
Driven by factors such as low valuations, the list of new economic targets, and most of the newly established public offerings that can be set up for Hong Kong stocks in the past two years, southbound funds have become increasingly more and more active.
According to statistics from reporters from the 21st Century Business Herald, as of January 20, the Southward Fund has traded net purchases for 21 consecutive business days. With the help of the Southward Fund, the trend of Hong Kong stocks has gradually become popular. Wind data shows that since 2021, the Hang Seng index increase was 10.03% and the cumulative increase of the Hang Seng technology index reached 17.32%.
As for the reason for the crazy influx of funds from the south, the industry generally believes that market funds are flowing into lower-value Hong Kong stocks.
On January 20, Chen Gang, co-head of the research department at Aide Securities and Futures, told a reporter for the 21st Century Business Herald that this round of capital inflows south into Hong Kong equities was jointly spurred by three factors. specific.
“First of all, valuation is cheap. In 2020, the Hong Kong stock market will obviously lag behind the main global market, and the valuation advantage is obvious. After experiencing the excessive returns of the main consumer sector in Mainland China, funds have begun to reflect investment demand for high-quality, low-value targets. Second, for institutions and funds, the valuation and allocation of core assets of most A-shares have reached a certain level at the moment. Once the management ladder rises again, it is necessary to find more core assets to update and allocate, while many on the mainland Scarce core assets are all in Hong Kong stocks, where there are strong demand for allocation. The third is the appreciation of the RMB, “Chen Gang said.
In Chen Gang’s view, in order to value assets in RMB Hong Kong dollar, in addition to reflecting the appreciation of the RMB exchange rate, it should also reflect a certain repair of the valuation premium.
However, it is worth mentioning that there is still some controversy over how long the current influx of funds southbound may last and whether it will affect the central pricing logic of the Hong Kong stock market.
In Chen Gang’s view, from the current macroeconomic environment, companies (listed in Hong Kong) have certain expectations of profit restoration, and the money supply is still in a relatively flexible stage, the general trend of funds that pursue valuations casualties will continue. . Judging by the inflow of southbound funds from Southbound Trading this year and the trend of foreign equity compensation targets, including China Mobile and SMIC, southbound funds are playing the main driving force behind pricing power. . This wave of performance will be reflected more in Hong Kong stocks this year. obvious.
However, some people in the industry believe it is difficult to make a clearer judgment on the dynamics of south-facing funds.
Wan Yongqiang, director of the Zhitong Financial Research Center, told reporters: “I think it is a dynamic question whether the (large net inflow of funds from the south) will continue. In the short term, the main factor is that the new funds from the continent are looking for more profitable targets. Once the entry is filled, it will slow down. In the long term, A shares will remain the main battlefield. Considering the complexity of the funding sources, the key nodes will suddenly explode.
In his opinion, the current peak of the inflow of funds to the south depends on the situation of the newly issued funds. Wan Yongqiang also pointed out bluntly: “The gradual increase in the influence of mainland funds (in Hong Kong stocks) is a general trend.”
Technology and consumer stocks become popular targets
Specifically, the 21st Century Business Herald reporter noted that Hong Kong Stock Connect’s southbound funds mainly flow to three main areas, including technology stocks, consumer sectors and some low-value and profitable Chinese state-owned enterprises.
Taking January 20 as an example, as capital continued to flow in the south, leading technology stock Alibaba closed up 8.5%, Alibaba Health was up more than 17%, Meituan was up more than 9%, Tencent and JD increased more than 3%; In the consumer sector, Haidilao, Jiumaojiu, Master Kong and Zhou Heiya increased 3.14%, 1.84%, 1.94% and 1.37% respectively; Among the low-value and profitable Chinese SOEs, China General Nuclear Power, Zoomlion, etc., rose 1.63 respectively. %, 3.4%.
Specifically, on January 20, the top ten Southbound Stock Connect purchases were Tencent Holdings, Xiaomi Group-U, SMIC, China Mobile, Man Wah Holdings, Hong Kong Stock Exchange, China National Offshore Oil Corporation, Meituan-W, Si Moore International and Cinda Bio, the net inflow of funds that day reached 5.095 million yuan, 3.810 million yuan, 1 billion yuan, 919 million yuan, 852 million yuan, 821 million yuan, 785 million yuan, 558 million yuan, 374 million yuan and 324 million yuan.
“In general, low valuations, scarce core assets and some high-quality A + H targets will be the preferred sectors of the capital to the south,” Chen Gang said.
“Southbound funds know more about mainland assets. Currently, the share of mainland companies in the Hong Kong stock market has increased significantly. The continued flow of funds southbound will bring change In the investment philosophy of Hong Kong stocks, be it Tencent Holdings, Haidilao and Jiumao, which are relatively scarce in A-Nine shares, there are still Chinese securities firms and state-owned companies that are significantly undervalued compared to A-shares. Behind this is the understanding of the scarce core assets of mainland Chinese investment institutions, ”said the aforementioned investor.
Cen Zhiyong, a strategist at Bailihao Securities, also noted: “When the equity stake of the capital to the south increases, it will help to control the right to speak. The valuation difference between Hong Kong shares and A shares can be gradually reduced.”
In the context of the gradual increase in the right to speak of funds in the south, the investment opportunities that Hong Kong shares will have in 2021 have also become a matter of concern in the market. In the eyes of many industry professionals, core assets such as consumerism and innovation are also booming in the A-share market. Certain investment opportunities still exist in the pharmaceutical, new energy and other sectors.
Wan Yongqiang believes that the overall Hong Kong stock market in 2021 will remain structural. “The general opportunity in 2021 should still be in mass consumption. Mass consumption can overtake the entire market. On the one hand, its moat is deep enough, in addition to yours. The consumer attributes are strong enough to resist. a series of emergencies. In addition, CXO pharmaceutical companies benefited from the strengthening of foreign order growth following the public health incident. In the first quarter of 2021, I believe that the market will be by the end of 2020. The two large sectors of the photovoltaic and the automobile continue ”.
(Author: Yang Ping Editor: Fang Ming Package)
