[Related Reading] Multiple positive factors activate Hong Kong stocks to rise sharply for three days, the HSI hits the new year's high, and new investment opportunities come?
Goldman Sachs and UBS are bullish on China! What is the meaning of switching to over allocated A-shares and Hong Kong shares?
Securities Times reporter An Zhongwen
Recently, not only A-share fund managers began to over allocate Hong Kong stocks, QDII (Qualified Domestic Institutional Investor) funds also shifted more positions from US stocks back to Hong Kong stocks.
Driven by multiple attractions such as public placement, favorable policies and oversold, Hong Kong Hang Seng Index hit a new closing high in nearly four months on April 24. Tencent Holdings, a group of more than 1000 funds, rose 13% in three trading days. About half of the more than 1000 funds are A-share theme fund products. In addition, the latest quarterly public offering report also showed that more and more QDII funds began to move their positions in US stocks back to Hong Kong stocks, which was completely opposite to the operation of QDII in reducing Hong Kong stocks and increasing its positions in US stocks in the first quarter of last year.
Heavy Hong Kong stock funds have soared
With the recent continuous strengthening of Hong Kong stocks, the enthusiasm of public funds to long the Hong Kong stock market has been growing again. Since Monday, the Hang Seng Index has risen strongly for three consecutive trading days. A number of fund heavy positions have risen sharply, and related funds have also soared.
It is worth mentioning that on April 24, the long position effect of Hong Kong stocks became more intense, and the rising trend spread from the first tier fund stocks represented by Tencent to the second or even third tier fund stocks. The fast hand of 301 funds with heavy positions rose 8.1% again, with a cumulative increase of 20% in three trading days. Bilibili, a position of 40 funds, also closed up 8.8%. At the end of last year, Shangtang, whose position was greatly reduced by the fund manager, was bought again by the fund manager after its share price hit a new low, which also pushed the stock price of Shangtang up more than 31% on a single day on April 24.
"We have noticed that there are many good companies with a market value of less than HK $2 billion or even HK $1 billion after deducting cash equivalents in the Hong Kong stock market. After a serious irrational sell-off, the fundamentals of such companies have become better, and the stock prices are not only lagging behind but also showing a decline, which means that the distribution opportunities of these companies based on the medium and long-term have emerged." A fund manager in Shenzhen believes that the adjustment of the Hong Kong stock market is about one and a half years ahead of the A-share market. In the context of the accelerated economic recovery in China, the recovery of the stock prices of China's high-quality assets in the Hong Kong stock market will also rebound faster.
Tencent Holdings, which is collectively organized in the Hong Kong market through public offering, is considered to be the core indicator of the recovery of the Internet sector and the inflection point of the activity of Hong Kong stocks. When more and more public funds have actively increased their positions in Hong Kong stocks such as Tencent since the previous reduction, it means that Hong Kong stocks are becoming more and more attractive from the perspective of investment security and potential income.
According to the newly disclosed quarterly public offering report, as of the end of March this year, Tencent has been listed as one of the top ten core heavy positions by up to 1041 funds, and more than half of these 1041 funds are actually A-share theme funds. This shows that, A-share fund products have begun to use Hong Kong stocks as an important driving force for performance attacks. Take Guangfa Science and Technology Power Fund managed by Li Yaozhu, a star fund manager, for example. As of the end of the first quarter of this year, 7 of the top ten heavy positions in this product were A shares, and 3 were Hong Kong shares, of which Tencent was the largest.
QDII sells US shares to buy Hong Kong shares
QDII funds used to attract investors with the U.S. and European stock markets as their core selling points. Now the Hong Kong stock QDII funds have started to make money and even become one of the top ten in all QDII performance, which also makes such products start to sweep away the haze.
The reporter of the Securities Times noted that up to now, the highest performance yield of QDII funds this year is 14.10%, and the best return of the Hong Kong stock QDII funds is close to matching this yield. The selected QDII of Dacheng Hong Kong shares under Dacheng Fund has achieved a return of 12.17% within the year, ranking third in all QDIIs. In addition, Morgan China Century QDII, which has a heavy position in Hong Kong stocks, has an annual yield of 11%, which also ranks among the top ten performance rankings of QDII.
The Hong Kong equity QDII fund - E Fund Asia Select, managed by Zhang Kun, the top fund manager, also reopened its upward path. The fund had previously lost 29.25%, 7.82% and 9.09% in 2021, 2022 and 2023, respectively. Now, supported by the strong rise of Tencent, Alibaba and other stocks, the product has achieved a positive return of more than 6.11% this year.
The QDII, the Internet track most talked about by fund holders, has shown a strong recovery trend. Harvest Global Internet, Wells Fargo China's small and medium-sized QDII, Hua'an Greater China's upgraded QDII, etc., which have heavy positions in Hong Kong stocks, have all seen a strong increase in their net worth. The increase in performance is largely due to the fact that fund managers have begun to move their positions in U.S. stocks to the Hong Kong stock market.
Different from the same period last year when QDII fund managers reduced their positions in Hong Kong stocks to pursue U.S. stocks, more and more QDIIs now allocate their positions in U.S. stocks to Hong Kong stocks in the first quarter of this year. Taking Harvest Global Internet Fund (QDII) as an example, the latest quarterly report shows that Wang Xinchen, the fund manager, has significantly reduced his position in US stocks, reducing his position in US stocks while vigorously increasing his position in Hong Kong stocks. So far, the position of the QDII fund in Hong Kong stocks has jumped to 34% of the total position of the fund. The insiders judged that, considering that the Hong Kong stock market has just started and the oversold is serious, the QDII fund managers who subsequently held large positions in US stocks still have sufficient positions to move to Hong Kong stocks.
Hong Kong stock risk release or sufficient
What is the specific logic of A-share funds and US equity QDII funds starting to scramble for Hong Kong shares?
"Standing in the first quarter and looking forward to the whole year, we have felt that this year may be a year when the systemic risks in the Hong Kong market have been better released." Zhang Feng, fund manager of Wells Fargo China's small and medium-sized QDII, believes that the gradual stabilization of the domestic economy will bring about a more moderate macro environment. Nevertheless, it will take some time for the overall macro-economy to truly return to steady growth, but the overall environment of the domestic economy is gradually improving. On the one hand, QDII continues to hold and buy some deep value stocks, and on the other hand, it selects some growth stocks. On the basis of relatively stable general environment, market activity increased. If we dig out some deep value stocks and growth stocks that have oversold and good quality, it is expected to bring good returns to the portfolio.
Liu Yang, the value discovery fund manager of UBS SDIC, believes that after nearly three years of continuous decline in Hong Kong shares, the market is in the range where the monetary policy environment is gradually turning from tight to loose, pessimism is released more and valuation is at the bottom, which provides a basis for the rebound. In the long run, it can be judged that China is currently at different stages of growth. The economic environment does face certain challenges, but the economic resilience is still there. China still has a large number of high-quality enterprises that are continuing to invest in science and technology, research and development and other fields, constantly gaining market share, and competing with global well-known enterprises in the international market, This brings more potential opportunities to the bottom-up stock selection strategy of the Fund. The Hong Kong stock market should continue to focus on high-quality companies with competitive advantages, and seize the opportunities of the overall market by balancing the relationship between growth and valuation.
Xiong Xiaoya, the fund manager of South Hong Kong Preferred, believes that the early sharp decline further highlights the value of Hong Kong shares, and the capital began to be distributed to companies with stable fundamentals and strong willingness to share dividends and buy back. During the Spring Festival, core consumption data such as liquor, tourist hotels, retail, catering, etc. exceeded previous weak expectations. The market believes that the economic fundamentals are gradually stabilizing through consumption, and is confident in Hong Kong stocks. In terms of asset allocation, on the premise of maintaining the balanced allocation of the industry, the fund's overall position remains stable, mainly obtaining excess returns through bottom-up stock selection, selecting industry leading companies with improved profitability and reasonable valuation in the industry, and paying particular attention to the company's technological advantages, industry growth and changes in industrial policies.
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