On January 21, the net inflow of funds from the South was HK $16.3 billion again! Note that this is the 14th consecutive trading day in which the net inflow of funds from the South has exceeded 10 billion Hong Kong dollars. Since 2021, the southward capital has been on the market, with a cumulative net inflow of HK $221.8 billion in 14 days.
At present, the average daily trading volume of southward funds has accounted for 30% of the total trading volume of Hong Kong stocks. Since the opening of the Shanghai Shenzhen Hong Kong link in November 2014, the cumulative net inflow of funds from the South has reached HK $1.95 trillion, which is far more than that from the north.
The inflow of funds from the south is constantly stimulating the stock price of Internet giants: Tencent once stood at the HK $700 level on the 21st, setting a new record. Meituan’s share price also hit a new high, with the latest market value exceeding HK $2.2 trillion.
Crazy southward capital: accumulated net inflow of HK $1.95 trillion
Money flows to Xiangjiang! A steady stream of southward capital is accelerating its inflow into Hong Kong stocks.
On January 21, although Hong Kong stocks rose and fell, the net inflow of funds from the South was still HK $16.3 billion, the 14th consecutive trading day with a net inflow of over HK $10 billion. Since 2021, a total of HK $221.8 billion of southward capital has been flowing in. During this period, the total trading volume of southward capital amounted to HK $937.3 billion, accounting for 28% of the total turnover of Hong Kong stocks (3.32 trillion).
Hot funds once pushed the Hang Seng Index to the 30000 mark on January 21. Since the beginning of the year, the Hang Seng Index has risen by 10%, and the Hang Seng technology index has risen by 16%.
According to wind data, since the opening of the Shanghai Shenzhen Hong Kong link in November 2014, the accumulated net inflow of funds from the South has reached HK $1.95 trillion, far exceeding that from the north. From the monthly data, since March 2019, southward funds have continued to net buy Hong Kong stocks, during which no net sell. Even in the period of Hong Kong stock crash from January to March 2020, the southward capital did not retreat, and the more it fell, the more it bought.
Data source: wind
In the past year of 2020, the total amount of funds going south to buy Hong Kong stocks was HK $3.09 trillion and HK $2.42 trillion, with a net purchase amount of HK $672.1 billion. In 2021, the inflow of capital to the South accelerated, and within a month, the accumulated net inflow has reached HK $221.8 billion.
Mainland funds are crazy to buy these stocks
Which Hong Kong stocks are these crazy influx of mainland funds buying?
According to wind data, in the fourth quarter of last year, the top 10 stocks bought by Nanxia capital included Tencent holdings, meituan, Xiaomi group, Geely Automobile, Hong Kong stock exchange, etc. Among them, Tencent holdings received a net purchase of HK $65.2 billion, while meituan and Xiaomi group received a net purchase of over HK $10 billion.
Since the beginning of this year, the inflow of funds from the South has accelerated. Statistics show that among the top 10 stocks bought by Tencent holdings, China Mobile, CNOOC, SMIC and meituan, the net purchase amounts reached HK $56.497 billion, HK $40.127 billion, HK $14.499 billion, HK $11.931 billion and HK $10.958 billion respectively.
From the trend of public offering funds, Hong Kong stocks are becoming the direction of capital pursuit.
On January 21, the first 100 billion fund manager Zhang Kun’s quarterly report of e-fonda blue chip selection revealed that in the fourth quarter of 2020, the fund significantly increased its positions in meituan and Tencent. Among them, the shareholding in meituan increased sharply from 8.5 million shares at the end of the third quarter to 26.19 million shares at the end of the fourth quarter, with a market value of nearly 6.5 billion yuan at the end of the period; the shareholding in Tencent increased from 7.18 million shares at the end of the third quarter to 13.52 million shares at the end of the fourth quarter, with a market value of 6.4 billion yuan at the end of the period.
At the end of the reporting period, the market value of Hong Kong stocks invested by e-fonda blue chip selection and Hong Kong stock link trading mechanism was 26.8 billion yuan, accounting for 39.54% of the net value, and nearly 40% of the funds were allocated to Hong Kong stocks.
Le shunning, chief analyst of yinglu securities, said in an interview with a Chinese reporter from a securities firm that in view of the recent inflow of funds from the south, there are three main characteristics in buying popular stocks:
1. A shares in the very scarce varieties, such as Tencent holdings, SIMORE international, etc;
2. Compared with A-shares, Hong Kong stocks have significant performance price ratio, such as CRRC, CRCC, CITIC Securities, etc;
3. Chinese state-owned enterprises, such as China Telecom and CNOOC, have long been undervalued in the Hong Kong stock market.
Leshuning pointed out that for a long time, the Hong Kong stock market is a typical offshore market, and the pricing power is mainly controlled by foreign capital, resulting in the marginalization of many small and medium-sized local enterprises. With the return of medium-sized stocks and the listing of more mainland companies in Hong Kong, including the implementation of the exchange fund system, it not only brings a lot of capital to the Hong Kong stock market, but also changes in investment philosophy and allocation ideas More obviously, it is the undervalued value of the Hong Kong stock market.
Why did the capital go south? Institutions: in order to allocate high quality and scarce assets
In response to this phenomenon, the investment and research team of tiger Securities said in an interview with a Chinese reporter from a securities firm that the core driving force of the capital’s going south lies in the increasing demand for the allocation of high-quality assets in China, and the high-quality assets are no longer limited to a single market. There are multiple reasons behind this, such as RMB appreciation, economic overtaking, China’s total retail sales of social consumer goods surpassing that of the United States this year, the reform of the Hong Kong stock exchange, and so on. In addition, high-quality growth stocks themselves are scarce goods, and most of them are distributed in the United States, Hong Kong and A. therefore, some funds are finally diverted to Hong Kong stocks.
“The new high of funds going south has a more direct relationship with the qualitative change (embracing China’s new economy) that is taking place in the Hong Kong market.” Zhang Yidong, global chief strategic analyst of industrial securities, told reporters that in 2018, with the change of IPO issuance system of the Hong Kong stock exchange, a number of excellent Internet leading enterprises, new consumer unicorns, biotechnology and other new economic leaders have been listed in Hong Kong in the past year. These high-quality core assets that are not available in the A-share market have attracted mainland investors. In 2020, among the top 20 stocks net bought by southward capital, Tencent holdings, meituan, Xiaomi group and other new economy companies ranked in the forefront.
Leshuning believes that recently, the domestic Internet giant’s anti-monopoly and Trump’s threat of delisting China’s Listed Companies in the United States have put pressure on many star stocks and caused them to fall sharply. Alibaba, Tencent, the three major telecom operators and other stock prices have fallen significantly, which constitutes the first reason for the recent continuous inflow of funds from the south, filling the golden hole smashed by these star stocks; the second reason is that the global epidemic, central banks vigorously implement loose monetary policy, frantically release liquidity, leading to the emergence of the global stock market led by the U.S. stock market In the morbid prosperity, although Hong Kong stocks have risen as a whole, there is still a big valuation gap compared with a shares. With the opening of the system, a large number of funds are allocated cheaper and better Hong Kong stock assets through Hong Kong stock connect.
What are the investment opportunities for Hong Kong stocks?
How to view the opportunity of Hong Kong stock market? Leshuning believes that from the current node, the performance of the follow-up Hong Kong stock market is still good, and the following directions are worthy of attention:
1. Leading in the field of high-quality Internet and technology;
2. A / h Hong Kong stocks listed on both sides with large discount, large market value, low valuation, stable or improved fundamentals;
3. A shares are relatively scarce, or unique companies with characteristics in Hong Kong stocks;
4. Affected by the recent events, the leading blue chip company with a sharp decline in valuation.
Tiger securities investment and research team told reporters that they are more optimistic about the new economy enterprises, especially the secondary listed companies, under the expected reform. This year, they will probably be listed together. In addition to the high growth rate, a significant particularity is that Hong Kong common stock and US ads can be interchanged, which means that the valuation systems and prices of the two places will anchor each other. In essence, the benchmark is us NASDAQ. In the past, many of the stocks were allocated by US dollar funds. After the second listing, the proportion of domestic investors and other Asian investors will gradually increase, which is more suitable for long-term attention.
GUI Haoming, chief market expert of Shenyin Wanguo Securities Research Institute, pointed out that Hong Kong stocks themselves have the demand to make up for the rise. Driven by a large number of funds going south, the rise is understandable. The current market is a little too strong, which has a certain speculative factors, a long time will definitely return. However, in the process of the return, the opportunities for Hong Kong stocks may not be over. First, stocks that are much cheaper than A-shares can be bought in the Hong Kong market, not only financial stocks, but also SMIC international. Secondly, there are many A-shares in Hong Kong market, such as Tencent, Xiaomi, China Mobile and so on.
Reprint indicated source：Spark Global Limited information