Hong Kong Stocks Will Go Out Of A Strong Market

Hong Kong stocks, which are regarded as valuation depressions, have been sought after by finance since last week. The Hang Seng Index has risen more than 11% since April and the Hang Seng index is soaring by nearly 20%. It is worth noting that the enthusiasm for capital entering the market is continuing.

"Our company can invest in Hong Kong stocks in addition to a product previously issued. Since the middle of March, it has already prepared all the staff to invest in the Hong Kong stock market, including the investment and research, and the focus of the market has been transferred to the Hongkong market." Shenzhen, a medium-sized private person, revealed that Hong Kong stocks might be more likely. In the future, it is possible to raise the positions of Hong Kong stocks in management assets to the same level as A shares.

According to reporters, the private sector also strongly encourages employees to open Hong Kong stock accounts. "The number of people familiar with the Hongkong market is less. In this way, under the premise of compliance with the regulation, it can not only share the wealth on the tuyere, but also quickly improve the team's familiarity with the Hongkong market." The above Shenzhen private placement frankly.

From the current situation, mainland funds and hot money in Hong Kong should be the main drivers of the sharp rise in Hong Kong stocks. By the end of March and the beginning of April, there were large and large investors in the capital of Guangzhou, Shenzhen and Shenzhen. They began to configure small and medium-sized Hong Kong stocks similar to A shares. "The reason for investing in Hong Kong stocks on the one hand is that A shares are high. On the other hand, Hong Kong stocks are relatively cheap compared with A shares, and there may be big opportunities in the short term." Shenzhen a business department said.

A recent report by China Merchants Securities also pointed out that the stock investors of Hong Kong stocks in the mainland were the first investors to take part in the current round of market. The earliest response to funds was expected to go south and the market for small and medium-sized shares was launched. Although the market is accelerating, the flow of incremental funds may be slightly differentiated. However, due to the need for continuous capital investment due to the stock market dominated small cap stocks, the main share of incremental capital will still be absorbed. Therefore, the mainland's individual investor funds for direct investment in Hong Kong stocks will continue to be concentrated in small and medium capitalization stocks.

It is worth noting that in the rush to raise the market, not only the mainland funds but also the hot money of the Hong Kong port were launched, and overseas funds were also bold in the current round of Hong Kong stock market. Bloomberg data showed that between March and early April, the ETF of the 4 largest Chinese investors in Hong Kong stocks reached a net inflow of nearly HK $15 billion.

Zhao Wenli, chief strategist of China Merchants Securities, pointed out that in all the shock markets of the Hong Kong stock market, there is an active participation of overseas short term trading funds, which is determined by the international status and freedom characteristics of the Hong Kong stock market. According to past experience, international hot money is more inclined to participate in all kinds of mainstream indices, weighting the constituent stocks and their derivatives. For example, in the concept market of Shanghai, Hong Kong and Shanghai in 2014, the international hot money focused on the A50 index and its derivatives. In the current round of market, the small and medium capitalization stock market driven by stock funds earlier has limited attraction to international hot money because of its limited capital capacity and scattered targets. After the index market started, the international hot money began to participate in the state-owned enterprises index and its constituent stocks. This trend will continue.

Since last week, the Hongkong monetary authority has undertaken a sale of US $4 billion 400 million, equivalent to more than HK $34 billion in capital injection. According to the Hongkong linked exchange rate system, the Hong Kong dollar is floating against the US dollar in the range of US $1 to HK $7.75-7.85. When the Hong Kong dollar hits 7.75 against the US dollar, the HKMA can buy US dollars from licensed banks in accordance with the linked exchange rate, and when it hits HK $7.85, it will sell US dollars.

"After the sudden start of the Hong Kong stock market last week, many foreign institutions are meeting urgently to change the previous strategy and increase the allocation of Hong Kong stocks, especially Chinese capital blue chips." A buyer Research Institute in Hongkong revealed. Not a few Foreign institutions The strategy is too cautious to think that mainland funds will not enter Hong Kong stocks so quickly and will not change the trend of the market even if they enter. But from the current situation, the urgency of the market has changed the views of this part of the organization.

However, judging from the current situation, there is not much mainland institutional capital involved in the rapid and hot market of Hong Kong stocks. Including public funds and sunshine private equity funds are still in the preparatory stage. Before entering the small scale hot money, the follow-up includes public offering. private placement The "regular running admission" of regular funds will stimulate Hong Kong stocks to a greater extent.

The Bank of China report shows that as of the end of March this year, the assets of the mainland fund amounted to 4 trillion and 680 billion yuan, of which 2 trillion and 120 billion yuan could invest in the stock market. It is expected that the mainland will form a new fund of $100 billion in April. It is estimated that the Hong Kong stock market will be able to go south through the channels such as Shanghai and Hong Kong through May. After March 27th, many public funds planned to layout Hong Kong stocks, including the southern fund's small cap, which was transformed into "Southern Hongkong preferred fund", focusing on the small and medium-sized board market in Hongkong. The the Great Wall Fund issued the first fund through Hong Kong and Shanghai to invest in Hong Kong stocks. Meanwhile, according to the HSBC Securities report, there will be RMB 500 billion yuan inflow from the mainland public fund in the future. Hong Kong stocks It includes the quota of 120 billion yuan of QDII, the quota of 230 billion yuan of Shanghai and Hong Kong through, and the 150 billion yuan quota of Shenzhen Hong Kong Tong is expected to be launched.

At the same time, the pace of overseas institutions entering the market is expected to accelerate. HSBC securities recently reported that the global mutual fund continued to reduce its Chinese stocks in the past 3 to 4 months and moved to emerging markets such as Philippines, Indonesia and India, meaning that many global funds need to raise their positions in Chinese stocks. Chinese stocks have surged recently, but valuations are still not over high, and the launch of Shenzhen Hong Kong Tong and the easing of China's monetary policy will provide support. At present, it is obviously not the right time to reduce positions, instead, it should be converted to underperforming shares.