Shenzhen And Hong Kong Through The Second Half Of The Four Categories Of Stocks Will Benefit From The Launch

Shanghai and Hong Kong have been opened for hundreds of days. "Shenzhen Hong Kong Tong" has attracted more and more attention as the next step of possible opening up after the Shanghai and Hong Kong links. CICC released research report today that, with the experience and technical preparation of Shanghai and Hong Kong, Shenzhen and Hong Kong through the launch will be completed, and is expected to be launched in the second half of this year.

CICC pointed out that unlike the Shanghai market, the Shenzhen market has not only the main board, but also small and medium sized boards and gem. The number of listed companies is 1629 (main board, medium and small board). Gem A, 468, 740 and 421 respectively. The total market capitalization of A shares is 14 trillion and 800 billion (VS). The Shanghai market is 29.3 trillion yuan. Compared with the Shanghai market, the number of Listed Companies in Shenzhen market is more; the average market value is small; private and growing enterprises account for a relatively high proportion; growth industries such as technology, medicine, consumption and other industries account for a relatively high proportion; in recent years, the average profit growth is faster; transactions are also more active, turnover rate is significantly higher than that of Shanghai market; and from the performance of stock prices, it is obviously better than Shanghai market in recent years, but the average valuation is also significantly higher than the Shanghai market.

CICC expects Shenzhen Hong Kong through mechanism to be comparable to Shanghai and Hong Kong through mechanism, but may be slightly more flexible. Specifically, (1) the total volume of transactions in the north is expected to be 3000 billion yuan, or when the Shenzhen Hong Kong Tong launched the Shanghai Hong Kong and Hong Kong through quota, it will expand with the total volume of Shanghai and Hong Kong through the existing total quota. (2) the stocks covered by the North transaction are expected to have two possibilities. One possibility is similar to the Shanghai Hong Kong pass mechanism, which covers the stock market in Shenzhen and the stock market, and the stock index is mainly composed of the corresponding index stocks and the A/H listed shares (which may cover 308 stocks and the market value is about 49%). Second possibility is to cover more stocks, such as the Shenzhen 1000 Kun index constituent stocks (the market value is about 82%, which is covered by Shanghai and Hong Kong). shares The proportion of the total market capitalization of the Shanghai market is quite high); (3) the stocks covered by the southern transaction: Although the Shenzhen and Hong Kong exchanges have been extended to the south through the Shenzhen and Hong Kong Exchanges, the stock market may be larger than the current coverage. However, it is estimated that, for the purpose of protecting investors, it is difficult to expand the stock market to a smaller market share including Hongkong listed companies. (4) the threshold of participants: there are no restrictions on the participants in the North trade, but the threshold for participation in the South trade may be reduced with the Shanghai Hong Kong through mechanism.

CICC believes that it is similar to Shanghai and Hong Kong. Shenzhen-Hongkong Stock Connect Potential beneficiary stocks include: (1) directly benefiting from the expansion of brokers and exchanges; (2) the relatively unique stocks of Shenzhen and Hongkong market relative to the other market; (3) QFII favors or "Shanghai Hong Kong Tong" active stocks similar deep market and Hongkong market stocks; 4) stocks with relatively large A/H spreads and so on. The above categories are not mutually exclusive and may overlap.