The Outbreak Disrupted The IPO Recovery Of Hong Kong Stocks, And The Property Market Cut Off.

Contributing author Julia Hongkong Report

At the beginning of the Spring Festival in 2020, a sudden outbreak of pneumonia caused by a new coronavirus had disrupted the pace of recovery in Hongkong's IPO market.

"The IPO market is inevitably affected by the epidemic, because IPO needs a lot of on-site work, and the team needs a lot of on-site interviews. We expect that at least 30% of the listed applications will be affected. We understand that many listed companies have postponed the timetable. Xin Yong and Hongkong management partner Lu Hua Ji said to the twenty-first Century economic news reporter.

For Lu Hua Ji, the outbreak completely disrupted his work plan. He admitted that because of the persistent pneumonia outbreak caused by the new coronavirus, it was not ideal either from the time window of stock valuation or stock sale. Therefore, most of the companies that had planned to go public chose to postpone the stock raising schedule. The IPO in progress may have to extend the timetable, while some companies that just started to IPO postponed to the second quarter or even the second half of the year.

"We are still assessing the specific impact. It will be difficult to carry out the work in the next two or three weeks. Some listed companies that originally planned to come to Hong Kong have postponed the listing plan. At present, there are still about 200 companies listed on the Hong Kong stock exchange. According to the regulations, if the stock market is still not completed for more than half a year, the company needs to add one or two quarters of audit tables, thus extending the timetable for listing. We believe that once the epidemic is under control, the IPO market will soon recover. " He pointed out.

In the past 2019, the IPO market in Hongkong experienced an extraordinary year. In August last year, the entire Hong Kong stock exchange hall was quiet. Only 1 companies listed on the market, compared with the previous several companies on the same day, the bell listing of the grand ceremony, can not help but sigh.

However, the Alibaba's return has rapidly reversed the declining trend. In November 26th last year, Alibaba listed successfully on the Hong Kong stock exchange, and the stock price surged 6.59% on the first day of listing, which injected a strong booster for the IPO market of Hong Kong stock market. According to the data obtained by the economic news reporters in twenty-first Century, after the return of Ali, there were 26 new shares issued by HKEx in December last year, and 20 IPO in January this year. Among them, the new stone culture (01740) of the mainland film and television drama publisher was over 1000 times oversubscribed on the public offering.

Lu Huaji, the IPO financial industry, once thought that IPO's "spring" was coming back. 1/3 of its auditors' income came from the IPO project.

Under the influence of the epidemic, the IPO market has cooled rapidly. Since February, only 3 new IPO schemes have been listed, namely, Tai hauk holdings, Fu Shi Financial Holdings, and AO Da holdings.

Short term adjustment or closing of Hong Kong stocks

The latest data released by the government in February 3rd showed that Hongkong's GDP contracted by 1.2% in the 2019 year, the first negative growth in the past ten years. FRAN, OISE HUANG, senior economist at Allianz, said: "although the performance in the fourth quarter of 2019 was slightly better than we expected (from 0.4% in the third quarter), we expect that in the three hit of trade disputes, social conflicts and epidemic situations, the first quarter of Hongkong's economic recession will further deepen. In the first quarter, GDP will grow from 0.6% to 1.4%.

The stock market has always been regarded as a barometer of the economy. Although the mainland stock market fell sharply on Monday, the Hong Kong stock market successfully stabilized, reflecting the market panic, the index of volatility index (VHSI) fell for the three consecutive trading day, up to 20.43. Following the cumulative rise of 363 points in the first two days, the Hang Seng index opened up more than 200 points in February 5th. As of the end of the day, the Hang Seng Index finally closed at 26786 points, up 110 points or 0.42%, and three trading days increased to 474 points.

Wang Hanfeng, chief strategist of CICC, believes that the impact of the local epidemic on the market may go through three stages, and Hong Kong stocks may be in the second half of the second stage. At present, the Hong Kong stock Hang Seng Index and hang seng index have reached 11.1% or 9.8% from the local high point respectively. They may be in the second half of the adjustment or near the end of the short-term adjustment. At present, valuation of A shares and Hong Kong stocks is attractive, especially for Hong Kong stocks. "Under the basic circumstances, we believe that the impact of the epidemic may be short-term, and maintain a positive view of the medium-term market. Structural upgrading of consumption and industrial upgrading is still a promising trend."

In his research report, he pointed out that during the 25 months of SARS outbreak on March 30, 2003 -4, the total number of Chinese listed stocks in Hongkong fell by 8.3%, while the latter rebounded to 18.2% after April 25th to June 15th.

At the same time, Yang Delong, executive general manager of Qianhai open source fund management company, told the twenty-first Century economic news reporter that from the valuation level, Hong Kong stocks have been in a depression in the major markets of the world. "The epidemic may cause short-term fluctuations in Hong Kong stocks, but after the stabilization of the epidemic, the resilience of Hong Kong stocks is expected to increase, and the fall in share prices actually provides investors with the opportunity to buy high-quality stocks."

The "Spring River heating duck prophet" has been bought by institutional investors ahead of time. Since February 3rd, Hong Kong stocks have resumed trading, they have recorded capital inflows continuously for three consecutive trading days, and inflow into 2 billion 176 million yuan, 4 billion 200 million yuan and 7 billion 397 million yuan respectively.

In twenty-first Century, according to the data obtained by economic report reporters, the technology stocks and financial stocks were sought after by South capital. In the last five trading days, the top five stocks of the Hong Kong stock entering the capital market were the US group review, the Bank of China, SMIC, the Xiaomi group and the Construction Bank. They entered 1 billion 397 million yuan, 1 billion 282 million yuan, 1 billion 269 million yuan, 1 billion 249 million yuan and 656 million yuan respectively.

"Hang Seng Index has dropped more than 2000 points in the last 7 trading days and has stabilized temporarily. However, considering that the epidemic continues, Hong Kong stocks still have downward pressure in the short term. It is expected that the Hang Seng index will linger between 25500 and 26000 points in the short term." Guo Sizhi, chief executive of DF securities and asset management, said in an interview.

The property market is frozen.

In addition, the Hongkong real estate market has also been affected by the epidemic, the expected property market "little spring" or postponed. "The epidemic is panic, and many prospective buyers who choose to enter the market choose to wait and see, postponing the entry into the market. The whole property market is almost at a standstill. Buyers have a larger bargaining price, while sellers are reluctant to reduce prices substantially." A real estate agent of Hongkong Hong Kong Island told reporters.

"It is expected that there will be a slight spring in the property market after the lunar new year, but under the influence of the epidemic, it is believed that little spring will not happen. It is estimated that the volume of housing will fall by 25%-35% in the next one or two months." Lin Hao, director of the executive director and valuation and consulting department of Laifang, told the twenty-first Century economic report.

However, he believes that the property market in Hongkong will not drop sharply during the SARS period of 2003. Since the financial crisis in 2008, the government has launched several rounds of counter cyclical measures to raise the down payment ratio. Therefore, the current owners' capacity is stronger than that of the year. The property market in the first half of the year will be more volatile, and the housing prices will decrease by 5%-10% in the second half of the year.

At the same time, Lin Hao pointed out that developers in the next one or two months will reduce the number of push plates until the epidemic is stable, and developers will focus on the small and medium-sized units priced below HK $10 million and the people's livelihood (mainly for the first time home demand). Therefore, the sales and pricing pressure of luxury projects will be greater this year. On the whole, it is estimated that the volume of second-hand housing will be reduced to about 56 thousand to 60 thousand this year.

The construction company of the new world group, one of the leading developers in Hongkong, issued a circular to the contractors that the site should be closed for two weeks from February 4th to February 17th.

Chen Yongjie, vice president of the Central Plains real estate and vice president of the Ministry of housing, also believes that many favorable factors are emerging at the beginning of the new year. For example, China and the United States have reached the first stage of the trade agreement and the social movement has eased slightly. In January, the property market is expected to have a spring festival. As of the middle of 1, more than 1000 transactions have been recorded.

He disclosed to reporters, however, during the lunar new year, the spread of new coronavirus epidemic, second-hand housing market activities were also greatly affected, a decrease of 70%-80% compared with the normal level, most developers did not show the pressure at the beginning of the year, so the delay will be delayed because of the epidemic, the cumulative purchasing power will erupt, or postponed until 3 or April.

But Chen Yongjie said that the impact of the epidemic on property prices is smaller than that of SARS. The government has issued a lot of property control measures, but there has been no panic selling. The market is dominated by self occupied and long-term investors. It is expected that there will not be a cliff fall when property is scarce. The impact on the property market is mainly turnover. It is estimated that trading volume will remain low in the first 15 days of February, and turnover will be reduced by 50%-80%.

As the downward pressure on the property market has increased, the number of negative equity cases in Hongkong has increased rapidly. Negative equity means that the market value of residential units is lower than the amount of mortgage loans that have not yet been repaid, and is regarded as a warning sign for the fall in the property market.

According to the data released by the Hongkong monetary authority, the number of residential mortgage loans for negative equity soared from 53 at the end of the third quarter of 2019 to 128 at the end of the fourth quarter, up 1.4 times by quarter. The amount of residential mortgage loans for negative equity increased from HK $330 million at the end of the third quarter of 2019 to HK $764 million at the end of the fourth quarter of 2019.

Cao Deming, senior vice president of the Hongkong mortgage and loan referral, told reporters: "Hongkong property prices will fall in the first quarter, and negative equity cases will continue to have room for improvement. It is likely to break through the 262 highest level in the fourth quarter of 2018. It is proposed that the owners of the high income mortgage scheme or two by the developer should carefully consider and calculate the personal burden and contribution ability. Once the property market is reversed, such owners will be more prone to negative equity.

At the same time, he disclosed that in the middle of 2019 10, the government launched the first time home buyers to relax the ceiling price ceiling of the mortgage insurance scheme provided by the Hongkong certificate Insurance Company Limited. The Hong Kong Mortgage Corp (HKMC) launched the high rise mortgage insurance scheme to provide high level mortgage insurance for banks. However, a mortgage insurance company in Hongkong has recently suspended the approval of a HK $6 million mortgage insurance scheme due to its current market conditions and risk assessment.