Since late April, the Hong Kong stock market has been active, showing a certainHoldempokerdownloadContinued to pick up, the Hang Seng Index set a record for the longest continuous rise in recent years, closing up for 10 consecutive days.
Specifically, as of May 14, the Hang Seng Index has risen 14% in the past month.Holdempokerdownload.1%, the Hang Seng Technology Index rose 16.3%, and the Hong Kong Stock Exchange Internet Index recorded an increase of 19.4%.
Combined with the data, we can find that this round of rise in the Hong Kong stock market is to some extent affected by the inflow of foreign capital. By analyzing the changes in Hong Kong stocks' positions, we can see that from April 22 to 30, international intermediaries' positions in the leading Internet sector of Hong Kong stocks increased significantly.
Table: capital movements of some Hong Kong stocks from April 22 to April 30
Data sources: Wind, HKEx.
What drives the recent Internet market of Hong Kong stocks?
The recent inflow of funds into the Internet sector of Hong Kong stocks may have been affected by the following factors.
First, the marginal improvement in fundamentals provides support for the market. The continued rebound in mainland economic fundamentals has provided impetus for capital inflows, while the S & P global manufacturing PMI index has risen and the manufacturing sector has continued to expand, and the improvement in global demand is expected to lead to the growth of new export orders and further boost market confidence.
In addition, five capital market cooperation measures with Hong Kong were issued in April, including relaxing the range of eligible ETF products for stocks under the Shanghai-Shenzhen-Hong Kong Stock Connect, including REITs into the Shanghai-Shenzhen-Hong Kong Stock Connect, supporting the inclusion of RMB stock trading counters in the Hong Kong Stock Connect, optimizing fund mutual recognition arrangements, and supporting mainland industry leading enterprises to list in Hong Kong, all of which will help to strengthen the connectivity between the two markets and inject new capital into the Hong Kong stock market. Increase market liquidity.
Second, foreign capital may flow into the Hong Kong stock market due to the recent increase in risk appetite in the global market. At the same time, after a period of market volatility, global investors may be looking for opportunities with more attractive valuations. The overall valuation of the Internet sector of Hong Kong stocks is relatively low and shows a basically good trend, and its long-term growth potential has been concerned by the market.
On the whole, the recent Hong Kong stock Internet sector market may be more related to the capital side drive, and shareholder return is an important factor to attract capital into Hong Kong stock Internet sector. In the current market environment, many Internet companies improve shareholder returns through share buybacks and dividends, which helps to enhance investor confidence in the company and enhance the investment attractiveness of the Internet sector.
Looking at the Future trend from the disassembly of Stock returns
The income change of stock investment is mainly composed of three parts, namely, profit change, valuation change and shareholder return (including share buyback and dividend).
From a profit point of view, Hong Kong Internet companies still have the potential for profit growth for some time to come, and the travel consumption data during the May Day period are also expected to support the follow-up market of the Internet sector. Data show that the overall recovery of consumption during the May Day period is more optimistic. Specifically, Meituan released "May Day" holiday consumption data show that in the first three days of the holiday, domestic living service consumption increased by 25% compared with the same period last year, and food orders in the cafeteria surged 73% compared with the same period last year. In addition, the national demand for ride-hailing has increased by 36% compared with the same period last year, according to a mid-term travel data briefing released by Hengdao's data research institute on May Day short holiday in 2024. As of the evening of May 4, the total box office of the new May Day film has exceeded 1.4 billion yuan, according to Maoyan Professional Edition. The recovery of related consumption is improving, or it will have a positive impact on the Internet sector of Hong Kong stocks.
From a valuation point of view, the Internet sector of Hong Kong stocks has risen considerably recently, but compared with the historical situation, the overall valuation of the sector is still relatively low: Bloomberg consensus expectations show that the Hang Seng Technology Index 2024 forward price-to-earnings ratio of 18.2 times. Horizontal comparison, the Nasdaq 2024 forward price-to-earnings ratio of 24.6 times. Compared with other market technology assets, the Internet sector of Hong Kong stocks also shows a higher performance-to-price ratio, and with the marginal improvement of fundamental data, the valuation is expected to be gradually repaired upward.
In terms of shareholder return, the overall rate of return of some Internet companies has been comparable to the dividend assets of the Hong Kong stock market. At the same time, Internet companies also have a certain growth, and their performance-to-price ratio has attracted the attention of many investors. In addition, Hong Kong Internet companies are also actively implementing buybacks. When the company buybacks and cancels these shares, the overall earnings per share (EPS) will also increase, which can indirectly return to shareholders. Since the beginning of this year, the total amount of Hong Kong stock buybacks has exceeded 71.5 billion Hong Kong dollars, with Internet leaders such as Tencent Holdings, Meituan, Xiaomi Group and Kuaishou among the top 10.
At present, Hang Seng Technology 30ETF (513010), Hong Kong Stock Connect Internet ETF (513040) and other products tracking index Internet leader "content" is relatively high, can easily layout Hong Kong stock Internet plate leader.
Note: data from Wind, statistics as of May 13, 2024. The above only serves as an objective introduction to the top 10 constituent stocks of the underlying index, does not constitute any investment advice, and does not serve as a guarantee of income. Index companies may adjust the index compilation plan in the future, and the composition and weight of index stocks may change dynamically. Please pay attention to the risk of higher equity weight and higher concentration of some index components.
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