Article/Tan Minglei, columnist of Sina Hong Kong (WeChat official account xlgg sina)
The biggest problem in Hong Kong market has always been the lack of counterparty due to insufficient liquidity. Some long-term investors are also forced to become permanent shareholders. However, it is difficult to find multiple long-term stable growth enterprises in one market. On the contrary, trend investors will win a lot.
"When the dollar finally weakens because the Federal Reserve will suspend interest rate hikes - if this moment comes, you'd better not miss it - that is the time to enter emerging markets," - Reuters Summit Quote.
Last night (11.19), US stocks fell sharply again. The chief economist (vice president level) of Evergrande Group and the president of Evergrande Economic Research Institute believe that the continuous sharp decline of US stocks may be a precursor to the end of Trump's boom, indicating that the US economy may have peaked.
The survey of global fund managers by Merrill Lynch and Bank of America shows that fund managers have the most pessimistic view of the global economy since 2008. According to the survey, 44% of fund managers expect global economic growth to decelerate next year, the worst estimate since November 2008.
30% of fund managers believe that US stocks have peaked, and 16% of fund managers believe that US stocks have peaked last month.
According to the data learned from Zhitong Financial APP, so far this year, the repurchase of US stocks has reached a new record of $800 billion, but the S&P 500 repurchase index has only risen by 0.9%, falling by 5.9% this quarter. Its recent decline suggests that the stock repurchase, once the key driving force for the rapid rise of US stocks, is now insufficient to stimulate the stock market.
Then the question arises, where will the money flowing out of the United States go?
In my opinion, the biggest problem in the Hong Kong market is the lack of counterparty due to insufficient liquidity. Some long-term investors are also forced to become permanent shareholders. However, it is difficult to find multiple long-term stable growth enterprises in one market. On the contrary, trend investors will win a lot.
Where the new capital comes from is the key, and the recognition of Hong Kong dollar assets must also be clear. Most of our local friends in Hong Kong are speculating in American stocks and A-shares, but at this stage, they are a little afraid of Hong Kong stocks around them. However, the US market has just begun to fall, and Hong Kong shares are not talking about Europe and the United States. The Japanese and South Korean markets are facing a bear feast early in the morning (11.20.2018). How can Hong Kong shares, which lack a leader, rise? If Big A is still unstable, Hong Kong stocks will lose their space.
Low price is the absolute principle. I remember that in the early stage of the bull market of Hong Kong stocks in 2017, Hong Kong dollar assets in the Hong Kong market were seriously underestimated for many years. When the Hong Kong Stock Connect was implemented, the super large institutions in the mainland made long-term allocation, raising the valuation balance line of the entire Hang Seng Index.
According to Zhitong Finance APP, November 17 is the third anniversary of the opening of Shanghai Hong Kong Stock Connect. Statistics show that on the eve of the third anniversary, together with the Shenzhen Hong Kong Stock Connect launched at the end of last year, the accumulated position of the Hong Kong Stock Connect has exceeded the level of HK $800 billion. This year, the Hong Kong Stock Connect (Shanghai) has a net inflow of 162.651 billion yuan into Hong Kong shares, and the Hong Kong Stock Connect (Shenzhen) has a net inflow of 88.255 billion yuan into Hong Kong shares.
According to the statistics of the Hong Kong Stock Exchange, as of November 14, 2018, the accumulated positions of the Shanghai Hong Kong Stock Connect and Shenzhen Hong Kong Stock Connect had amounted to 804.8 billion Hong Kong dollars. In terms of the total market value of Hong Kong shares of about 33 trillion Hong Kong dollars, the position of southbound funds accounted for 2.4%. If only the circulating market value was taken into account, the position of southbound funds would be higher.
After entering 2018, the southward capital entering Hong Kong stocks has been gradually slow. Recently, the funds for going south through connectivity have become less and less, but the funds for going north have increased in an orderly manner.
Guangfa Research believes that since late October, A shares have reached the consensus of "policy bottom". The AH market and the US stock market began to "decouple", which is closely related to the "rescue" policy of the stock market. The liquidity risk of "bailing out" private enterprises and equity pledge is very significant, and plays a role in maintaining stability and underpinning the stock market.
However, compared with A-shares, institutional investors in Hong Kong shares enjoy a lower degree of dividend from the "rescue" policy, and the market trading behavior is more "flat", which is mainly reflected in: 1) The market activity indicators such as the one-day rise and fall, turnover, turnover rate are lower than A-shares; 2) Compared with A-shares, Hong Kong shares show little sign of style conversion, and investors are less sensitive to policies.
Guangfa believes that the default risk of high-yield US dollar debt of Chinese enterprises is increasing, which may have some suppression on the future Hong Kong stock market. Hong Hao of BOCOM International recently made a more straightforward outlook for 2019: the HSI will lose to the mainland stock market in 2019!
In fact, when large-scale funds start to enter emerging markets is the key. If we simply rely on foreign capital to drive up prices, we must have a big logic that is worthy of everyone's recognition.
Didier Saint Georges, managing director of Carmignac, helped manage more than 50 billion euros of assets. "But now is not the time," he said, adding that there were other problems.
International institutions believe that there may be a great opportunity to intervene in emerging markets in the middle of 2019. St. George pointed out that the following three points deserve our special attention:
1. Global economic growth needs more clarity.
2. The second is valuation. Compared with major trading partners, many emerging market currencies are at low levels relative to historical prices. The expected P/E ratio of MSCI Mingsheng emerging market stock index is about 10 times, while the expected P/E ratio of MSCI Mingsheng global market index is higher than 14.
3. The core of this emerging market feast is the RMB exchange rate. If the RMB falls below the important threshold of 7 against the US dollar, how far the currency will fall below 7 will become the key to determining the fate of emerging markets.
From the above point of view, we can see that foreign investors pay more attention to the currency itself than to the stock market. Today's market news is that Warburg Pincus Investment seeks to raise $4 billion to set up another private equity fund focusing on investing in China.
Considering the recent love of foreign investors for A-share index EFT, the author subconsciously believes that if nothing happens, Warburg Pincus still aims at A-share!
(The author of this article introduces: Executive Editor in Chief of Zhitong Finance. )
