AP, April 24 (reporter Yan Jun) Then we played music and danced. Hong Kong stocks rose for three consecutive days. The Hang Seng Index and Hang Seng Science and Technology Index rose more than 6% and 9% respectively.
On April 24, cloud computing Shanghai Hong Kong Shenzhen ETF, Hang Seng Internet ETF, Hong Kong stock Internet ETF and other Hong Kong stock ETFs rose more than 4% again that day.
This positive change was also captured by foreign institutions. After UBS upgraded A-shares and Hong Kong shares, Goldman Sachs analysts also said on April 23 that they would continue to oversell A-shares. "We prefer the A-share market to the offshore market. Recently, Goldman Sachs increased its holdings in the Asian index, and also increased the allocation of MSCI China index products in Hong Kong."
In the eyes of insiders, foreign institutions have expressed their views on Hong Kong stocks and A-shares. Last Friday (April 19), Nvidia plummeted 10%, allowing funds to re-examine the depression of global allocation. In emerging markets, Hong Kong stocks and A-shares have become extremely attractive valuations. For example, judging from the valuation of technology leading enterprises in the US and Hong Kong stocks, Nvidia's P/E ratio reached as high as 69.2, and Tencent Holdings' P/E ratio was only 25.6 after rising 13% in three days.
Goldman Sachs' Latest View: Overallocation of A-shares
When talking about their views on A-shares, Goldman Sachs analysts said that they visited the United States, Singapore, Tokyo and other places in the past month, and found that international investors' sentiment, risk, preference and interest in China's stock market were improving after communicating with investors.
The reasons for the above conclusions lie in the following four aspects:
First, China's economic performance in the first quarter was better than expected. The PMI data of manufacturing and non manufacturing industries has made significant improvements. In the previous research report on April 10, Goldman Sachs also revised its forecast of China's GDP growth in 2024, rising from 4.8% to 5%. Just seeing the improvement of the macroeconomic fundamentals of the economy, the attitude of overseas investors has become more positive.
The second is the "national team" lift. Goldman Sachs used "direct sponsorship" to describe the national team's move. It also points out that the addition of the national team changes the equation of A-share risk return. Previously, investors worried about further downside risks. When the national team provided support, it meant that the risk of further downside was contained. This is the focus that overseas investors pay particular attention to.
Third, back to the fundamentals of enterprises, the performance of the fourth quarter reports of 2023 successively disclosed by Chinese enterprises was generally better than expected. From the perspective of valuation, both A-shares and Hong Kong shares are at a low level.
Fourth, the proportion of global mutual funds' exposure to Chinese stocks in the total asset management scale is not high at present 。
At the same time, Goldman Sachs analysts also noted the new "National Ninth Article" on improving the quality of listed companies, dividends, delisting and other relevant provisions. Goldman Sachs believes that the dividend yield of A-share is still not high, and listed companies still have a lot of room for dividends. In terms of delisting, only by eliminating companies with poor quality and retaining good companies can we improve the returns of shareholders and investors. In addition, Goldman Sachs believes that domestic penalties in the field of financial crimes can also be appropriately improved by drawing on the experience of the United States.
Therefore, Goldman Sachs estimates that, even without considering the fundamental situation, with the improvement and standardization of the A-share capital market system, the stock market still has more value to release. The potential for valuation improvement is about 20, and a more optimistic estimate may be up to 40% of the potential upside.
UBS upgraded A-share and Hong Kong shares
Just recently, Sunil Tirumalai, chief strategist of UBS Global Emerging Market Stocks, raised concerns about the research and development of A-share and Hong Kong stock ratings.
UBS analysts believe that MSCI China Index EPS (earnings per share) is not affected by the real estate trend. Among the constituent stocks of MSCI China Index, the consumption and Internet industries account for a high proportion. With the initial signs of recovery in consumption, the performance is expected to be better.
Therefore, UBS believes that it is more optimistic about the earnings of the stock market, and the early signs of consumption recovery appear, which can be seen from the strong holiday consumption data since the beginning of the year, and the performance of listed consumer enterprises is better than China's overall consumption. For us, any rebound in consumer confidence means that household savings may flow to consumption and the stock market.
UBS pointed out that the calculation method of China's market valuation needs to be changed for two reasons. First, from a traditional perspective, the brief appearance of funds in February may not constitute a strong fundamental catalyst. However, it did help to build a bottom for the market with sharp falls/shocks and reverse the downward risk pattern. Second, the trend of Chinese enterprises' dividends and buybacks exceeding expectations is growing. If the global market is more worried about geopolitics and higher interest rates are maintained for a longer period of time, the visibility of shareholder returns can be greatly improved, and it will pay close attention to the next stage of market reform.
Hong Kong shares outperformed A-shares and walked out of the independent market
With the domestic economic data exceeding expectations, the improvement of the capital market system, and the favorable policies of the mainland on the Hong Kong stock market, many people believe that overseas funds are flowing back to Hong Kong stocks.
Feng Chencheng, the fund manager of the Hong Kong stock Internet ETF, believes that from the perspective of the leading rise of the Hong Kong stock Internet sector, which represents the Hong Kong stock beta, more attention should be paid to the trend of foreign capital flows in Hong Kong stocks, as well as the current allocation and transaction value of Chinese assets represented by the Hong Kong stock Internet sector for overseas investors.
Recently, the CSRC issued five cooperation measures with the Hong Kong capital market, aiming to further expand the connectivity of the two markets, promote the coordinated development of the two capital markets, help more enterprises with long-term development and return potential to list in Hong Kong, attract more international funds to Hong Kong, and strengthen and enhance Hong Kong's position as an international financial center.
The rapid rise of Hong Kong shares showed a trend independent of that of A-shares. Since the Spring Festival, the southward capital has received net inflows for 11 consecutive weeks, 29 of which have been in the state of net inflows in the last 30 days, with a cumulative net inflow of more than HK $200 billion since the beginning of the year.
At present, the Hong Kong stock market has entered the rising range ahead of the A-share market. Feng Chencheng believes that in the process of switching to high-quality business, macro expectations are still factors that disturb investor sentiment at the molecular end. The situation of the service retail industry during the May Day holiday may become a perspective for foreign investors to observe China's macro economy.
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