Overview and development rhythm of China concept stock market: as of March 16, 2022, 380 Chinese enterprises have been listed overseas, with a cumulative market value of US $1.53 trillion. Among them, 281 are listed in the United States, which is the main listing place of China concept shares. From the perspective of industry structure, China concept shares are mainly concentrated in the fields of optional consumption, information technology, industry and finance, accounting for 68.42% in total.
Since March, China concept stocks have fallen rapidly, and the financial committee meeting has boosted the short-term rebound of the market. We believe that this decline is mainly affected by several factors: 1 Recently, the U.S. Securities and Exchange Commission (SEC) listed five Chinese companies in the list identified under the foreign company Accountability Act. This news also triggered a sharp decline in some companies in U.S. and Hong Kong stocks. 2. The rising geopolitical risks in Russia and Ukraine and the rising expectations of investors for the tightening of the Federal Reserve’s monetary policy indirectly dragged down the valuation of China concept shares. 3. The repeated outbreaks in Hong Kong and the mainland have raised investors’ concerns about the recovery of the economy after the epidemic. However, on March 16, the meeting of the Finance Committee responded to the key issues worried by the market, saying that at present, the regulatory authorities of China and the United States have made positive progress and are committed to forming specific cooperation plans. The convening of the financial committee meeting sent a positive signal and boosted market confidence. After the financial committee meeting was held, the market rebounded sharply in the short term.
The conditions for the listing of zhonggai shares in Hong Kong are basically mature, and there are about 30 qualified companies. Reflected in three aspects: 1) the optimization of the listing system of overseas issuers and the reduction of the threshold are conducive to expanding the scope of the second listing to small and medium-sized enterprises and non Chuang Shenzhen New Industries Biomedical Engineering Co.Ltd(300832) companies, while allowing vie and WVR structured companies to be directly dual listed, which is conducive to accelerating the return of China concept shares; 2) The listing status conversion rules are clear and the methods are expanded, the new voluntary conversion is added, and a grace period is given to the overseas delisting of the second listed issuer, so as to effectively reduce the delisting risk; 3) MSCI Emerging Market Index involves the gradual switching of China concept shares to Hong Kong shares, and the superposition of dual main listed companies can be incorporated into Hong Kong stock connect, which is conducive to attracting foreign capital and southward funds and improving liquidity and valuation. According to the new system standards, up to now, there are preliminarily expected to be 30 zhonggai companies that meet the conditions for the second listing and issuance, most of which are concentrated in the fields of software services, retail and diversified finance.
The decline of China concept shares has little impact on A-share listed companies. By reviewing the history, we can find several laws: 1 The reason for the decline of China concept shares has a great relationship with the development stage of the Internet industry and the stability of China US relations. 2. The decline of China concept stock has little impact on A-share and US stock market, while the fluctuation of US stock and A-share market will have an impact on China concept stock to a certain extent. 3. At present, many businesses of zhonggai giant companies are closely related to the Chinese market. China’s economic environment and market environment will affect the profits of some zhonggai shares, and then have an impact on the stock price of zhonggai shares. 4. There is a strong correlation between China concept stocks and Hong Kong stocks. The decline of China concept stocks will have a certain impact on Hong Kong stocks.
Configuration suggestions: since this year, China concept stocks have fallen sharply and rapidly, and the valuations of some companies have been near historical lows. The recent meeting of the financial committee has greatly boosted market confidence and boosted the short-term rebound of the market. The emotional impact caused by the conflict between Russia and Ukraine has gradually disappeared, and the short-term market has a certain opportunity under the catalysis of policies. In the long run, the valuation bubble has been squeezed, and it is at a high cost performance position. The importance of value investing is uplifting, and it can be used for valuing stocks with high profitability and high cost performance.
Risk warning: the risk that the policy exceeds the expectation; Geopolitical friction is more than expected.
