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the hong kong stock market is turbulent!

in response to the hot stock market, financial secretary paul chan mo-po of the hong kong sar government wrote on october 6 that the overall market sentiment has improved significantly. the hang seng index has risen by more than 5,600 points in the past 15 trading days, an increase of 33%, and the value of the hong kong stock market has also risen to 394,000. billion hong kong dollars.

chen maobo said that many factors are conducive to the market's continued improvement in the future. among them, a number of policy measures announced earlier by the mainland to vigorously support the economy play a key role. at the same time, the market believes that the u.s. interest rate cut cycle has begun, so the risk appetite for investment (i.e., the willingness to bear investment risks and obtain high investment returns) has increased. the purchase demand of many fund portfolios triggered by position indicators, coupled with the very attractive valuations of the hong kong and mainland markets, have made investors cautiously optimistic about the market outlook.

so, after experiencing this round of surge, how will hong kong stocks perform next?

chen maobo spoke

on october 6, the financial secretary of the hong kong sar government, paul chan mo-po, published a secretary's essay on the hong kong sar government website, saying that the recent recovery in market conditions and investors' cautious optimism about the market outlook are expected to push many companies to speed up the process of listing in hong kong.

chen maobo pointed out that entering the fourth quarter of 2024, the overall market sentiment has improved significantly. the hang seng index has risen to a high of about two and a half years, with a cumulative increase of more than 5,600 points in the past 15 trading days, an increase of 33%. the average daily turnover from september to last friday was approximately hk$192 billion, which was double the average daily turnover in august. the value of the hong kong stock market also rose to hk$39.4 trillion.

the performance of some investment products with a high proportion of hong kong stocks has also increased. taking mandatory provident fund (mpf) investment as an example, a research institution reported that the outstanding performance of hong kong stocks in september resulted in the overall mpf return in the third quarter exceeding 7%, the best quarterly performance in the past two years. .

chen maobo said that many factors are conducive to the market's continued improvement in the future. among them, a number of policy measures announced earlier by the mainland to vigorously support the economy play a key role. at the same time, the market believes that the u.s. interest rate cut cycle has begun, so the risk appetite for investments has increased. the purchase demand of many fund portfolios triggered by position indicators, coupled with the very attractive valuations of the hong kong and mainland china markets, have made investors cautiously optimistic about the market outlook.

it can be expected that the rebound in market conditions and investors' cautious optimism about the market outlook will push many companies to speed up the process of listing in hong kong, including many technological innovation companies; it will also encourage more companies to settle in hong kong.

chen maobo pointed out that an active capital market can help promote the effective allocation of funds, including directing funds to support technological innovation, industrial format innovation, and business model innovation, which can not only empower economic growth, but also allow investors to achieve better results. the returns also allow society to better share the fruits of economic development. for this reason, continuous reform and innovation of the market system is very important.

chan mao-po said: “looking back over the past period, hong kong’s listing system has also continued to reform and innovate. in 2018, we allowed biotechnology companies that have not yet made profits or revenue, as well as new economy companies with equal shares and different rights structures to list in hong kong. currently, more than 330 new economy companies have been listed in hong kong. although they only account for about 13% of the number of listed companies, their total market value exceeds hk$9.6 trillion, accounting for more than 26% of the total market value of hong kong stocks and accounting for nearly 23% of the average daily trading volume of hong kong stocks. %, taking the hong kong stock market to a new level. last year, we further introduced chapter 18c to support the financing of innovative companies engaged in specialized technologies. these reforms not only enhance the attractiveness and vitality of the hong kong stock market, but also make hong kong a it is the preferred listing location for many scientific and technological companies.”

chen mobo said that more innovative and high-quality companies listed in hong kong will enrich the industry structure of hong kong listed companies and attract more interest in the hong kong stock market from investors focusing on new economic growth points and long-term investors. a booming capital market will also attract more high-quality companies, forming a virtuous cycle.

what’s next for hong kong stocks?

in the past 15 trading days (september 12 to october 4), hong kong's hang seng index has risen by 5,628 points, or nearly 33%; the hang seng technology index has risen by 1,776 points, or more than 51%.

from the perspective of individual stocks, securities firms and real estate stocks have experienced larger gains in this round of market conditions. among real estate stocks, ronshine china rose by more than 850%, kaisa group and china aoyuan rose by more than 470%, agile group and shimao group rose by more than 365%, fantasia holdings rose by more than 300%, sunac china rose by more than 280%, and vanke the company rose 186%. among brokerage stocks, shenwan hongyuan hong kong rose by more than 810%, china merchants securities rose by nearly 249%, and guotai junan international also rose by nearly 200%.

in addition, in the past 15 trading days, most of the heavyweight stocks of hang seng technology have increased by close to or more than 30%. among them, jd.com, meituan, and smic have increased by nearly 80%, alibaba has increased by nearly 40%, and tencent holdings and xiaomi group have increased by 29%. %.

so, after the recent surge, how will the market perform in the future? zhang yidong, global chief strategist of industrial securities, recently issued a strategy report saying that after the recent rise in hong kong stocks, there is still room for further recovery.

zhang yidong pointed out that in the short term, the market's rising process may be bumpy, but in the medium term, there are no limits on market space and time. if there are short-term fluctuations in the stock market in october, we should face them positively. the recent market conditions of china's a-shares and hong kong stocks can be described as "a boat has crossed a thousand mountains". after experiencing a short-squeeze rebound at the end of september, the growth rate of china's stock market, especially china's hong kong stocks, in 2024 has led the world. during the rise in october, there may be disturbances such as the u.s. election and european and american stock market shocks, which may lead to short-term profit taking.

secondly, in the short to medium term, we must abandon bear market thinking and strengthen bullish thinking. the shock in october was more about gathering momentum and rushing through the sand. the shock was to find more sustainable and reversible mainline opportunities. there is no limit on the market space and time in the mid-term, because the financial power is still flowing. zhang yidong said that foreign capital is the main force driving the recent surge in hong kong stocks. in the medium term, under the trend of reallocation of residents' wealth, industrial capital, insurance and financial management funds to the chinese stock market, the allocation of domestic capital to a-shares and hong kong stocks will alternately increase.

zhang yidong believes that after the recent rise in hong kong stocks, there is still room for further recovery. the recent surge is a "correction" after the reversal of pessimistic expectations. considering the current policy orientation and intensity of changes, the risk appetite, valuation, and valuation gap between core assets and overseas leading companies in this round of market should be repaired in many aspects, at least close to january 2023 levels.

daiwa securities analyst john choi also said that as many stocks are still trading below their three- and five-year averages, there is more momentum for this rebound, adding that e-commerce companies will be the target of further stimulus measures. one of the main beneficiaries.

southwest securities analyst wang xiangjie is also optimistic about the technology and internet sectors of hong kong stocks. wang xiangjie pointed out that after the sharp rise, most hang seng technology heavyweight stocks still have high valuation value for money. from the perspective of industry performance, the real estate and consumer sectors of hong kong stocks have led the gains in this round of market conditions, representing the direction of procyclical gaming. after the policy expectations are reversed, they are the first direction of attack for trading funds. the hang seng technology sector, represented by medicine and the internet, saw the second largest increase. the technology internet sector with fundamental support will have longer market sustainability in the future.