What do you think of the recent pullback in Hong Kong stocks?Institution: The intention of foreign capital has not changed and is still expected to increase positions in the future
News from the Financial Associated Press, February 8 (edited by Zhou Xinyang)After the Hong Kong stock market experienced a “good start” in the Year of the Rabbit, it has recently undergone significant adjustments due to the combined influence of internal and external factors. The Hang Seng Index has fallen by 5.6% in the past week or so. Most of the sectors that benefited from the expectation of domestic economic recovery have seen a significant correction in recent days.
In this regard, the latest research on Guotai Junan’s overseas strategy believes that the internal cause of the correction is that the previous positives have basically been realized, and the valuation and risk premium have returned to a reasonable level; the external factor is the recent recurrence of Sino-US relations, which affects the risk appetite of foreign capital.
The Guojun Overseas report stated that from the perspective of odds, the allocation value of Hong Kong stocks relative to A shares has weakened marginally. At present, the forward 12-month forecast P/E of the Hang Seng Index and the Shanghai and Shenzhen 300 Index has been restored to near the historical average level, but the risk premium of Hong Kong stocks has declined more than that of A shares. The optimistic expectations of some sectors are fully accounted for, and the valuation is already expensive.
Nevertheless, the recovery of the domestic economy is still the main line of the market in the medium term, and the logic of the relative dominance of Hong Kong stocks has not changed. Compared with previous domestic economic upcycles, Hong Kong stocks are generally more concerned and flexible than the A-share market, and pro-cyclical industries can record excess returns compared with A-shares. In addition, Hong Kong stocks are more sensitive than A-shares when U.S. bond yields are falling; the 10-year U.S. bond yield fell by 10bp, Hong Kong stocks rose by an average of 1.1% and A-shares rose by an average of 0.4%.
Looking at the follow-up, under the general environment of marginal improvement in overseas liquidity, the tendency of foreign capital trading in China to recover has not changed, and it is still expected to continue to increase positions in Hong Kong stocks after short-term adjustments.
In terms of strategy, Guojun has the following main updates on Hong Kong stocks in the short term: 1) The 22,000 point of the Hang Seng Index is the psychological threshold of the short-term market. It is difficult to break through and stand firm without a catalyst. Hong Kong stocks may consolidate and digest around this position. Mainly sexual market; 2) In terms of Sino-US relations, it does not constitute a systemic risk for the time being. Even if it repeats again, from the perspective of historical experience, the impact range is about 5-10%, and it is near the 20,000 point or the bottom area; 3) The previous rise The rapid technical adjustment does not constitute a selling point for the medium-term trend.
The research report believes that the trend of domestic economic recovery will continue, which will lead to a significant upward revision in the profits of Hong Kong stock companies. At the same time, overseas liquidity recovery transactions are still in progress. The catalyst is the release of domestic social financing and the policy shift of the overseas Federal Reserve, which may be around the second quarter.
In terms of industry configuration, continue the strategy of reversing adversity and taking into account internal and external factors;
1) Two-step recovery of domestic consumption——Consumption chain adversity reversal strategy. From the perspective of stock prices, most of the varieties related to the recovery of the consumption scene are fully traded, and alpha stocks need to be selected. At this stage, it is recommended to pay attention to optional consumer products such as automobiles and consumer electronics. Their valuations are not expensive, and the optimistic expectations are not enough, and they are still in a depression. Investors are advised to actively pay attention.
2) “Internal and external demand strange board effect” –Real estate chain adversity reversal strategy. On the real estate supply side, “three arrows are firing together”, looking forward to future demand-side policies. It is recommended to pay attention to real estate, finance, materials and other industries.
3）Overseas liquidity reversal strategy. In 2023, the inflation trend in the United States will decline, and the liquidity reversal transaction has been started in advance and is still in progress. Pay attention to industries that are more sensitive to U.S. debt, such as innovative drugs, semiconductors, and gold in Hong Kong stocks.
