HK - Market Strategy 03 (Dec 17 - Dec 25)

[behappyalways]

CCP Calls Meeting Of Chinese Tech Giants As Investors Hope For End To Crackdown
https://www.zerohedge.com/markets/ccp-c ... -crackdown

[winston]

China strategy: Policy measures gathering pace

The weaker-than-expected April economic data & the USD strength have raised growth concerns.

Having said that, policy response has been gathering momentum, echoing the positive signals from the April Politburo meeting.

In this note, we will examine the impact of USD strength & look into measures that support specific industries that have been announced so far.

Historically, MSCI China had a positive correlation with USDCNY especially during the short periods of major USDCNY movement.

On the contrary, the onshore A-shares market has not shown a particular trend during the period of USD strength, & it has been more resilient to USDCNY movement than the offshore market (represented by MSCI China).

We remain constructive on Chinese equities and see long-term investment value emerge over a 12-month investment horizon with valuation of CSI300, MSCI China & Hang Seng Index (HSI) at 16-21% discount to their long-term average levels.

We prefer the onshore A-shares within Chinese equities & we expect the relative outperformance is likely to resume in 2H22 when easing measures intensify.

Since the April Politburo meeting, industry supportive policies have been announced in infrastructure (in terms of a renewables subsidy) & real estate (easing mortgage rate for first-time home buyers & allowing selected private real estate developers to issue onshore bonds).

In the near-term, we prefer those with defensive dividends and/or share buyback support, Hong Kong (HK) re-opening plays, & selected construction and infrastructure related plays (including renewables) that will benefit from the expected stepping up of infrastructure spending.

In the next few weeks, we would also watch out for:-
i) the auto industry for potential announcements of supportive measures for rural consumption &
ii) internet and platform industries as a symposium on digital economy is to be held this week.

For a sustainable rally, we will watch out for some key signs for growth and valuation normalization.

These include clearer signs for sustainable activity resumption, stepping up of policy easing, a more stable real estate market, and a concrete plan to address American depositary receipt (ADR) auditing.

Source: OCBC

[behappyalways]

增持中概股!北京有望鬆綁監管 京東.阿里股價飆 ｜方念華｜FOCUS全球新聞 20220518
https://m.youtube.com/watch?v=mTrCYqEIKsQ

[winston]

Hong Kong-Mainland ETF Connect May Start in Two Months

By Wei Yiyang and Han Wei

Source: Caixin Global

https://www.caixinglobal.com/2022-05-28 ... 91347.html

[winston]

HSBC Global Research Aims HSI at 25,410, Recommends 4 Themes like Border Reboot, Infra Boom

The HK equity market was the second-best in Asia in 2Q22, given subsiding fifth wave of outbreak locally, HSBC Global Research said in its report.

Although local headwinds lingered in numerous sectors such as retail and tourism, the broker forecast the H shares to improve in 2H22 in light of deep value and better economic outlook.

The broker targeted the HSI at 25,410 with a potential upside of 18%.

It suggested investors to eye on four investment themes for HK equities:-
1) the international border reboot;
2) Northern Metropolis,
3) construction boom, and
4) more financial connect programs.

Based on the above four themes, the broker listed the related beneficiaries: BOC HONG KONG (02388.HK) , CATHAY PAC AIR (00293.HK), CHINA STATE CON (03311.HK) , HENDERSON LAND (0012.HK), SHK PPT (00016.HK) and SWIREPROPERTIES (01972.HK) . All were rated Buy.

Source: AAStocks Financial News

[winston]

Daiwa emphasized three investment themes:-
1. Policy tailwinds (steel, Internet, hotels, brokers)
2. Margin recovery (staples, battery, Internet, delivery) and
3. Industry-specific themes (sportswear, solar, battery materials).

Source: AAstocks.com

[behappyalways]

Hong Kong Tech Firm 'Thanks' Investors After Shares Soar Over 6000% From IPO
https://www.zerohedge.com/markets/hong- ... r-6000-ipo

[winston]

Alpha Picks: September Conviction Calls

For September, we expect increased volatility with downside bias due to a confluence
of contrasting factors − liquidity concerns from the Fed tightening, but an expected
positive lift from China’s increased policy support and easing of the drought. Hence, we
add Weimob to our SELL list.

Source: UOBKH

https://research.uobkayhian.com/content ... 8fc43f7f08

[winston]

Hong Kong stocks end at 11-year low

The world’s most acute market risks from the Federal Reserve’s monetary tightening to Beijing’s Covid Zero pursuit are hammering Chinese stocks, pushing a key gauge to the lowest in more than a decade as analysts struggle to predict a bottom.

Hong Kong’s benchmark Hang Seng Index fell 1.6% to close at the lowest level since December 2011. The Hang Seng China Enterprises Index, a gauge of Chinese stocks traded in the city, slid 1.1% after earlier touching levels last seen in 2008.

Both equity gauges are among the world’s worst performers this year.

Beijing remains determined to root out Covid-19 at all costs, while the nation’s property market is going through an unprecedented crisis. Meanwhile, tension with the US runs high over thorny issues including trade and relations with Taiwan and Russia, which raise the risk of Western sanctions.

The Hang Seng Index has lost more than 22% so far this year, extending last year’s decline. Since a market crash at the onset of the pandemic in March 2020, the benchmark has underperformed the MSCI World Index by a whopping 69 percentage points. Mainland companies account for about two-thirds of stocks listed on the Hong Kong gauge.

It’s not as if Beijing hasn’t acted. The People’s Bank of China is an outlier amid a global wave of aggressive tightening, having lowered a key policy rate twice this year. Authorities have also stepped up fiscal stimulus and loosened home purchase restrictions in some cities to arrest a slump in the property market.

Source: Bloomberg

https://www.thestandard.com.hk/breaking ... 1-year-low

[winston]

After a US$1.3 trillion rout, analysts predict more pain in store for Hong Kong’s stock market amid rate increases

History suggests investors should be wary of more losses in the next one to three months after Hong Kong’s commercial banks lifted their prime rates

The HKMA warned of more possible rate increases, with the Federal Reserve still to hold two more policy meetings this year

by Zhang Shidong

Source: SCMP

https://www.scmp.com/business/china-bus ... pain-store