Bank Strategist: There Are Legitimate Reasons For The Low Price Of Listed Stocks In Hongkong.

As the Chinese government encourages domestic funds to support the local capital market, the flow of funds to H-shares has been greatly reduced.

In April, the capital inflow amounted to US $8 billion, and from that time until now, the net purchase scale was only US $966 million.

Hongkong's Hang Seng Index attracted a historical capital inflow in April, but capital spillovers began in the past two weeks.

In April of this year, the Chinese mainland companies

The valuation is 25% less than that of the mainland.

Since the start of monetary stimulus, the implementation of Shanghai and Hong Kong has brought a lot of capital into the stock market.

Traders rush to buy H-shares at a record pace. Some world bank analysts believe that the stock market will soon rise sharply.

The only problem, however, is that the above measures have not played a role.

suffer

In the end of 4, the Morgan Stanley MSCI China Index plunged 21%, due to weakness, the collapse of the mainland stock market and the expectation of US interest rate hike.

According to analysis, this is the largest decline in the global benchmark index.

This is another setback for the market that has long disappointed investors.

Since 1992, the annual growth rate of MSCI China Index has not exceeded 1%, while the standard & Poor's 500 index has increased by 9% annually.

French strategists and Chart Partners venture capitalists strategist predicted that securities prices will fall in the current year, suggesting that H-shares will continue to fall.

economic slowdown

Francis Cheung, head of the strategy Department of mainland China and Hongkong, CLSA, has a negative view: "only when economic power remains stable or positive, H shares can be bullish."

When the economy continues to slow down, it is a bear market, and bear markets are easier to emerge.

As of 10:06 on the 7 th of Hongkong, MSCI China Index rose 1.2%.

China's latest economic data show that the growth momentum of the world's second largest economy is still weak.

Industrial profits fell by 0.3% in June, and private manufacturing profits fell to their lowest level in two years in July.

According to the economist's forecast, the data coming out this month will show that the volume of imports and exports is falling at the same time.

At the same time, as the Chinese government encourages domestic funds to support the local capital market, the flow of funds to H-shares has been greatly reduced.

In April, the capital inflow amounted to US $8 billion, and from that time until now, the net purchase scale was only US $966 million.

Considering that the Federal Reserve is about to raise taxes in September, international investors are

The attractiveness of riskier emerging markets weakened.

Hongkong's Hang Seng Index attracted a historical capital inflow in April, but capital spillovers began in the past two weeks.

Too cheap

Thomas Schroder Thomas Schroeder, founder and general manager of Chart Partners, predicts that commodity prices will plummet in the next two months, taking into account the slowdown in China's economic growth.

Prices may drop by 10%, down to key support levels.

When H-share prices peaked in April, he suggested that investors should sell them.

Roger Semyon, HSBC equity strategist in China, said Roger Xie was too low in value to ignore the collapse.

The MSCI China index is only 1.4 times the city's net rate, while the MSCI world index is 2.1, almost the biggest gap since 2003.

Mr. Xie predicted that by the end of the year, the Hang Seng China enterprise index will rebound by 26%. He suggested that "value type and long-term investors should consider some high-quality H-share companies."

Value trap

Bin Shi, manager of Hongkong global asset management, believes that the reason why H-shares are so attractive is related to the reference of mainland pactions.

Hang Seng AH share premium index shows that the Shanghai and Hong Kong listed shares still have a 25% discount rate in Hongkong.

Aluminium Corp is the world's largest aluminum smelter on the mainland, and its share price in Hongkong is 67% lower than that in the mainland.

Daniel, a strategist at Chase Bank of Manhattan, said that the low price of listed stocks in Hongkong has justified reasons. Daniel

The benchmark index is dominated by banks and raw materials companies, and they are under pressure from bad debts and falling commodity prices.

Therefore, foreign investors are worried that the government will intervene too much in the capital market. The current policymakers seem to be funding the mainland stock market.

He added: "some investors believe that H-share is a trap of value and is unlikely to turn over or reassess."