The “spring agitation” of A-Shares has been opened, and the Hong Kong stock market is still in the brewing period
Affected by the policy at the end of the year, A-Shares have opened the “spring agitation” in advance. As the economy will face greater pressure next year, it is expected that the steady growth policy will have a strong driving force and may start earlier. It is expected that the strength of the policy next year will be the support of the market for some time in the future. The “spring agitation” of A-Shares has been started in advance.
The recent trend of Hong Kong stocks is obviously lower than that of a shares, which is mainly dragged down by risk events and science and technology network plate. The Internet sector of Hong Kong stocks is still under pressure due to antitrust policies and unsatisfactory performance. At the same time, the recent expansion of US sanctions on some Chinese enterprises has also affected the risk appetite of Hong Kong stocks, which is also the main reason why the trend of Hong Kong stocks is not as good as A-Shares recently.
Hong Kong stocks “spring agitation” is similar to A-Shares in most years
The “spring agitation” of Hong Kong stocks is not significantly different from that of A-Shares in most years. More than 70% of the profits in Hong Kong stocks come from mainland enterprises. Therefore, the macroeconomic situation and policies of the mainland will affect the A-share and Hong Kong stock markets simultaneously. The opening of the Shanghai Shenzhen Hong Kong stock connect in 2014 further enhanced the linkage between the mainland stock market and Hong Kong stocks. The “spring agitation” of Hong Kong stocks has differentiated from A-Shares only in a few years, mainly because the Hong Kong stock market usually rises after the emergence of a clear trend of economic improvement, while the A-share market reacts before and after the implementation of policies.
Overseas liquidity has little impact on the “spring agitation” of Hong Kong stocks
Overseas liquidity has little impact on the “spring agitation” of Hong Kong stocks. Historically, although the Fed QE1 and qe3 reduced the overall range of bond purchase, the performance of Hong Kong stocks and emerging markets was sluggish. However, affected by the synergy of the mainland policy and the “spring agitation” of a shares, Hong Kong stocks can still obtain excess returns during the “spring agitation”. During the “spring agitation”, policy change is the core reason affecting the trend of Hong Kong stocks.
After the “spring agitation”, the Hong Kong stock market was affected by overseas liquidity. The duration of Federal Reserve QE1 and qe3 debt reduction is 9 months and 11 months respectively, and the duration of “spring agitation” is usually 1-3 months. Due to the relatively long duration of the Federal Reserve’s debt reduction, Hong Kong stocks rose in the short term during the “spring agitation”, and the gains recorded in the early stage were often erased due to the lack of growth momentum in the later stage.
It is expected that the “spring agitation” of Hong Kong stocks will be delayed
The steady growth policy is expected to catalyze Hong Kong stocks to start “spring agitation”, but the starting point will lag behind a shares. Compared with a shares, Hong Kong stocks pay more attention to the verification of fundamental economic data, which is also the main reason for the two obvious “spring agitation” deviations between Hong Kong stocks and A-Shares in history. Although the central economic work conference clearly stated that the focus of economic work next year is “stability first and seeking progress in stability”, there are still differences in the market’s views on the policy underpinning economy. Therefore, the starting point of “spring agitation” of Hong Kong stocks in 2022 will lag behind the A-share market. Two factors can be referred to for the start-up time: 1. The subsequent economic data confirm the recovery trend of China’s economic prosperity. 2. The US sanctions against Chinese enterprises have eased periodically.
We are optimistic about the repair space of Hong Kong stocks in the short term. In terms of economy, boosted by the accelerated issuance of special bonds, infrastructure investment is expected to pick up and inject vitality into macroeconomic repair. In terms of valuation, the support of the 168 month moving average for Hong Kong stocks is of great significance in history. At present, the Hang Seng Index has basically touched the 168 month moving average, and the subsequent negative impact is limited.
In terms of industry configuration, it is suggested to pay attention to: 1) the intensive period of antitrust policy has passed, and the valuation of the Internet industry is expected to be repaired. 2) Machinery and construction industries benefiting from the expected warming of China’s infrastructure and marginal improvement in prosperity. 3) Focus on the pharmaceutical sector whose current valuation has been adjusted relatively fully and the anti epidemic concept stocks catalyzed by new strains. 4) Recently, the food and beverage sector has benefited from the rising price tide and various consumption policies.
Risk tips: 1. US sanctions against Chinese enterprises have intensified; 2. The economy went down faster than expected; 3. Overseas fluctuations have intensified.
