Morgan, Asia Chief Executive Officer And Chief Executive Officer Of Asia Equity Strategy, JP Zheng Zifeng Private Bank, China'S Stock Market Will Usher In A "Magnificent Turn".

Following Alibaba, NetEase and Jingdong have successfully listed in Hong Kong second, and the boom in stock return is in full swing.

"The return of these stocks is positively positive. In addition to the active participation of mainland investors, global investors have shown great interest, including some short-term hedge funds, who are strongly interested in these stocks. These hedge funds want to take part in the cash spread between the two places. Many long-term investors are also very optimistic about the prospects of these stocks, and take the opportunity to do some industry rotation to replace some old economic stocks. Morgan, director of Asia's executive and Asia stock strategy division, JP Zheng Zifeng's private bank, said in an interview with the twenty-first Century economic report reporter in the Hong Kong stock big Cafe column.

NetEase and Jingdong successfully raised over $7 billion in the Hong Kong stock market in just two weeks, and investors subscribed to enthusiasm. In the part of the public offering, NetEase and Jingdong respectively subscribed 360 times and 180 times over subscriptions, attracting more than about 300000 retail investors. The first day's share price rose by 8.1% and 3.5% respectively, and the fund raising amount was HK $24 billion 200 million and HK $29 billion 800 million respectively.

He admitted that under the increasing tension of the international macro situation, many stock companies began to re-examine the listing place to ensure that the company's financing channels were smooth. Meanwhile, in the global market, Hong Kong stocks are still in the valuation of "depression". He suggests that investors can make full use of market fluctuations to increase the positions of these new economic stocks.

Data show that the HKEx's top five IPO in the first half of this year are new economic companies. With more and more new economic companies landing on the Hong Kong stock market, the Hong Kong stock market will completely change the pattern dominated by the traditional economy, such as finance and real estate, so as to inject new impetus into Hongkong's capital market.

In 2018, the Hongkong stock exchange also revised the listing rules, which set up a new and convenient second listing channel for the Greater China and international companies seeking to list in the Hongkong market. According to the Listing Rules of the HKEx, the listed companies of Greater China (mainland, Hongkong, Macao and Taiwan) come to Hongkong for second listing, which must reach at least HK $10 billion and the latest audited fiscal year's revenue should reach HK $1 billion.

The target is mainly innovative industries, which need to be listed on exchanges such as NYSE, NASDAQ and LSE. Recently, there have been good compliance records in the last two fiscal years.

For such companies, listing in Hong Kong can not only enjoy the advantages of the local market, but also facilitate the access and freedom of Hongkong's capital. At the same time, the final version of the Listing Rules Amendment also allows the stock to submit a listing application in a confidential manner, enjoying immunities and greatly reducing the listing period.

"From the perspective of trading volume and diversification of investors, we feel that Hongkong is still a preferred destination for listing." He said.

Following Alibaba, Jingdong and NetEase have successfully listed in Hong Kong second, and the boom in stock return is in full swing. -IC photo

It is good for Hong Kong stock market.

Twenty-first Century: NetEase and Jingdong return to Hong Kong stocks. Retail subscriptions are very enthusiastic. Some local brokerages in Hongkong also say that 20%-30% is mainland investors. What is the overall market performance of these stocks after listing in Hongkong? What is the trading activity of such stocks in Hongkong market and the situation of major investors?

Zheng Zifeng: the latest listed companies in Hongkong have a relatively positive market reaction. Besides the active participation of mainland investors, global investors have shown great interest, including some hedge funds, who are strongly interested in these stocks. These hedge funds want to take part in the cash spread between the two places. Many long-term investors are also very optimistic about the prospects of these stocks, and take the opportunity to do some industry rotation to replace some old economic stocks, this time provides a good opportunity.

I also noticed a phenomenon that many ADR shareholders are interested in converting their ADR into shares in Hongkong, and they are very confident about these Hongkong listed Internet shares. If the volume of trading in the future Hongkong market reaches 55% of the total share of the stock, Hongkong will become the main listing place of these stocks, and will accelerate the process of these stocks entering Hong Kong stock in the future.

Twenty-first Century: what do you think the far-reaching impact of NetEase, Jingdong and other major stock returns on Hong Kong stock market will be?

Zheng Zifeng: from the valuation, growth, liquidity has a more positive impact. At present, the price index of the Hang Seng index is about 11 times, the index of the state-owned enterprises is about 8 times, and the S & P 500 index has nearly 20 times the price earnings ratio. The difference in valuation is mainly due to the fact that the Hongkong stock market index has always focused on the old economic sector. The proportion of the old financial sector and the real estate sector accounts for nearly 70% of the Hang Seng Index, while the proportion of the S & P 500 index is more than half of the new economic stocks, including technology, medical care and so on. Because of the difference in structure, we see that the earnings of US stocks are much higher than that of Hong Kong stocks, so investors are willing to pay higher price earnings ratios for US stocks. Hongkong is open to China's stock market listing, and the future high quality stocks are expected to be included in the Hang Seng Index and the state-owned enterprises index, which will greatly enhance the prospects for growth of Hong Kong stocks and improve the profit outlook.

From the perspective of liquidity, it is also a good thing. From the recent listing of several stocks, the proportion of the total market value of Hong Kong stocks is about 0.2%-0.3%, but trading accounts for 2%-3% of the total volume of Hong Kong stock market, about 10 times, and the market's interest in these shares is much higher than that of the old stock.

"Twenty-first Century": in fact, the Chinese stock market has always had a strong incentive to return to China's capital market. We also see that there have been a wave of stock market delisting in the US before and after 2011. What factors do you think are the main driving forces behind the latest round of regression? Why do these companies choose to return at this time node? What is the significance of consolidating the status of Hongkong's international financial center?

Zheng Zifeng: the increasing complexity of Sino US relations is a major reason for the return of China's stock market. In May this year, the United States launched the foreign company Accountability Act, which further tightened the rules for listing foreign companies. If the companies fail to provide relevant audit documents in the next three years, the United States has the right to cancel their right to list in the United States. This is a real threat. Some stocks are facing the risk of delisting. Therefore, it is necessary to reexamine whether to return to the mainland or Hongkong to protect their financing channels. Hongkong has also released restrictions on the listing of shares with different rights and second listed stocks. In the future, these stocks will be included in Hang Seng Index, which can attract more passive funds (refer to passive funds of tracking index) to increase the proportion of such stocks, which will also attract more stock companies to list in Hongkong second.

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Twenty-first Century: is Hong Kong stock the best choice for China's stock market companies?

Zheng Zifeng: Hongkong is an international financial center. From the perspective of volume of transactions and diversification of investors, we feel that Hongkong is still a preferred destination for listing.

Twenty-first Century: at present, there are more than 240 stocks in the overseas listing, and investors may be dazzled by their choice. From the industry perspective, what areas do you prefer?

Zheng Zifeng: from a fundamental point of view, we mainly focus on the electricity supplier sector. Especially after the outbreak, many investors are concerned about whether the trend of the electricity supplier in the first half of the year can be sustained. The growth of e-commerce platform in 4-5 is still far higher than market expectations. Many consumers have changed their consumption behavior, such as buying vegetables online. At the same time, we spend more time at home and need more online entertainment, and the proportion of online retailing is increasing. In the first half of the year, the proportion of electricity providers in the total retail sales has reached 1/4. After 618 shopping holidays this year, the proportion is close to 27%. Therefore, we are very optimistic about the leader of the electricity supplier platform, and the fundamentals can support their valuation.

Twenty-first Century: compared with the existing new economic companies in the Hong Kong stock market, what issues should mainland investors pay attention to when investing in these stocks, and how to avoid minefields?

Zheng Zifeng: we need to pay special attention to the fundamentals and industry prospects of the company. In addition, most of China's stock market is still listed on the US stock exchange. The global macro situation will definitely affect the performance and volatility of China's stock market. About 1/3 of the stock market listings in the United States are held by US institutional investors. In the event of the US restrictions on pension or other institutional investors investing in Chinese companies, the stock market will bear the brunt. Compared with that in the US, the stock return to Hong Kong stocks is obviously higher in safety factor, and they are also the leaders of the Internet share. We are more confident in these stocks. Investors can make appropriate use of market volatility to carry out some holdings.

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