The selling of overseas funds is the main reason for the decline of Hong Kong stock market
Recently, Hong Kong stocks fell sharply, and the fund sellers mainly came from international intermediaries. The systematic risks such as the delisting risk of China concept shares and the conflict between Russia and Ukraine have made overseas investors pessimistic about the prospects of the Hong Kong stock market, and there has been a systematic outflow of international funds. Chinese funds are taking the opportunity to buy Hong Kong stocks.
The current round of selling of overseas funds is mainly affected by the factors of zhonggai shares themselves, rather than the indiscriminate selling of foreign capital on emerging market indexes. From the perspective of overseas ETFs, ETFs mainly invested in China concept stocks and A-share A50 Index did have a significant net outflow, but funds invested in MSCI Emerging Markets and other emerging market funds did not have a significant net outflow, but recorded a net inflow.
The bottom of the policy is now, will the market bottom again?
Last week, the financial stability and Development Commission of the State Council held a special meeting, and the end of the policy has been realized. However, referring to the situation in 2008 and 2018, it can be found that it often takes some time for the Hong Kong stock market from the policy bottom to the real market bottom.
At present, China's economy is showing an obvious positive trend. Whether the market will bottom again in the future is mainly affected by overseas risks. The real bottom of the market depends on two points. The first is whether the factors affecting economic fundamentals have improved, and the second is whether the overseas market can maintain stability. From the perspective of China's economy, at present, benefiting from the sustained force of steady growth policy and the correction of real estate policy, China's economy will have more powerful support, and the risks faced by the market mainly come from the outside.
What other risks does the external face?
First, the conflict between Russia and Ukraine has exacerbated the problem of high inflation faced by Europe and the United States, and also caused the market's concern about the risk of global stagflation. The conflict between Russia and Ukraine is different from the previous geopolitical conflicts since 2000. If the global energy prices continue to rise under the conflict between Russia and Ukraine, the risk of global stagflation will further intensify.
The current inflection point of global inflation is hard to say, and the probability of economic recession in Europe and the United States is also rising. At present, it is difficult to say the inflection point of US inflation. The public opinion survey released by the Federal Reserve on March 15 shows that the probability of economic recession in the United States and the European Union in the next 12 months is 33% and 50% respectively. The economic recession in Europe and the United States will lead to the simultaneous decline of the global economy, and China's economy will also be impacted. Historically, during the period of high inflation, US stocks fell with the rise of inflation. When inflation fell, US stocks would usher in a repair market.
Secondly, China concept shares still face the tail risk of delisting in the U.S. exchange. If zhonggai fails to comply with the requirements of the foreign corporate liability act for three consecutive years, it will face the possibility of being forcibly prohibited from trading in the future. In the future, with more Chinese concept stocks issuing annual reports, the "provisional list" of the CSRC may be further expanded, which may continue to drag down the short-term stock price performance of companies re listed in Hong Kong stocks.
If overseas markets remain stable, Hong Kong stocks will still rebound moderately
Before the inflation expectations in Europe and the United States fall, the Hong Kong stock market will still rebound moderately, but the repair space is limited. At present, the conflict between Russia and Ukraine continues to push up energy prices, exacerbating market concerns about global stagflation. Therefore, in the short term, the Hong Kong stock market has limited repair space in the short term and the rebound is expected to be relatively mild before global inflation improves significantly. In the future, we need to pay attention to the progress of China US negotiations on audit supervision and the trend changes of inflation indicators in Europe and the United States.
In terms of industry allocation, pay attention to the new economic industries with deep decline in the early stage. After the excessive panic in the market has been repaired, the logic of the stock market still returns to the fundamental pricing, while the value of new economic industries such as Internet, consumption and health care that oversold in the early stage has not been affected by the short-term selling of the market. In addition, it is suggested to pay attention to the hotel, catering, tourism, gambling and other industries that are expected to recover in future demand and have the configuration cost performance at present; And construction companies and real estate companies with excellent assets that benefit from China's "steady growth" policy.
Risk tips: 1 US sanctions against Chinese enterprises have intensified; 2. The economy went down faster than expected; 3. The fluctuation of overseas market intensifies.
