Since July, the bull market in A-shares and Hong Kong stocks has ignited the enthusiasm of investors, especially retail investors, and the number of accounts opened by major brokerages has soared. However, the market since more than half a month after the carnival, the Hang Seng Index since July 7 began to go into a downward trend, the Shanghai Stock Exchange Index since July 14, also experienced a continuous decline.
July 16, the SSE fell 4.5% in a single day, the Hang Seng Composite Index was also driven by the biggest single-day drop of 3.34% in the second half of the year. Therefore, also by many retail investors can not help but sigh: just finished opening an account bull market collapsed? Into the market the next day to lose, this round of bull market to "brake"?
Technology, essential consumer, medical stocks in the bull market rose
Throughout this year's market performance, most of the A-share gains are concentrated in the two weeks after the Dragon Boat Festival. The Hang Seng Index (HSI) saw a wave of modest gains in late March-early April, and has also realized larger gains since July.
Hong Hao, managing director and chief strategist at BOCOM International, also mentioned that during the two weeks after the Dragon Boat Festival, as China's central bank cut the rediscount rate for the first time in 10 years, and the China Securities Finance Corp. lowered margin requirements for brokers, the market interpreted the news as a continued easing bias from China's central bank. Among other things, the news about easing margins for brokers was also a major relaxation by the regulator since the 2015 bubble.
However, consecutive declines in Hong Kong and A-share markets in recent days have poured cold water on investor enthusiasm. Among them, on July 16, the Shanghai Composite Index appeared "disaster-level" decline, a single-day drop of 4.5%, in 2008 since the single-day drop ranked 31st. At the same time, Hong Kong's Hang Seng Composite Index fell 3.34% on July 16, ranking 68th in terms of one-day declines since 2008.
In fact, the so-called "bull market more rapid decline, bear market more negative", in the Hong Kong stock market over the years in several rounds of bull market, there is no lack of many cases of one-day rapid decline. Among them, between 2003-2007, the Hang Seng Composite Index **** 48 trading days a single day drop of more than 2%, the largest single day drop of 4.89%, there are 6 trading days a single day drop of more than 4%; 2009, July 2013 - June 2015, June 2016 - June 2018, a single day drop of more than 2% of the trading day also reached 22 respectively, 11, and 12.
In particular, looking at the performance of the Hong Kong stock market since mid-to-late June, the overall market capitalization of Hong Kong stocks in various industry sectors during June 15-July 6 increased by 13.88%. Among them, after the Dragon Boat Festival (June 30-July 6) rose as much as 9.04%.
Since mid-June, the market capitalization of all Hong Kong stocks has risen during the period, and the top three sectors were information technology, consumer goods, and healthcare, up 21.85%, 18.71%, and 15.08%, respectively.
July 7, the Hang Seng index began to decline, as of July 16, the overall market value of Hong Kong stocks by industry sectors fell 3.32% from July 6,. Among them, real estate, financials and energy became the top three sectors leading the decline during this period, down 8.01%, 6.97% and 6.37% respectively.
For this market decline, the Shanghai open source fund chief economist Yang Delong said that the decline factors mainly include the previous index rapid pull up, accumulated a lot of profit-taking plate, the market adjustment signals will trigger a lot of sell-offs; foreign investment in the recent continued outflow, profit-taking and so on. In the face of this bullish trend, most institutions and analysts are still bullish on the value of Hong Kong stocks in the medium and long term.
Brokerage firms optimistic about the performance of Hong Kong stocks in the medium and long term
In the face of Hong Kong's stock market performance, Guosen Securities maintains an optimistic view. The bank believes that the A/H shares into a full-scale bull market, the second half of 2020 will accelerate the rise of the HSI 30,000-33,000 points within the year can be expected, and at the same time to maintain the 2021 HSI stood 40,000 points mark judgment.
Which, Guosen Securities believes that, on the one hand, the Federal Reserve in response to the public **** health incidents, the release of a sky-high amount of liquidity, the abundance of U.S. dollars need to the world to seek high-quality asset allocations, and China can effectively control the health incidents to achieve a rapid return to growth in the economy will become the preferred destination for the inflow of funds.
Fangcheng strategy will be the market plunge initially judged as a bull market in the adjustment, does not change the tone of the bull market. It believes that historically the bull market adjustment is more violent, more for the layout of the opportunity. Adjustment focus on low valuation of large financial sector stage of complementary rise and growth of science and technology industry long-term industrial trend of the evolution of the configuration opportunities.
At the same time, Zhang Yidong, global chief strategy analyst of Societe Generale Securities, believes that the current performance of the HSI contrasts greatly with the structural market of the new economy in Hong Kong stocks.2019 year-to-date, the Hang Seng information technology industry, health care industry, essential consumer industry launched a roaring market, while the HSI by the financial and real estate overweight dragged down.
At present, the Hong Kong stock market is actively changing the issuance system and indexing rules, short-term listed new economy leaders into the Hang Seng Index, information technology industry in the Hang Seng Index weighting will significantly jump to 24%; the medium-term more eligible Chinese stocks to go to Hong Kong for a second listing, or even delisted from the U.S. stock market, return to Hong Kong stocks; information technology industry is expected to exceed the proportion of the financial sector to reach 40%, will help the Hong Kong stock market capitalization structure from the whole. The new core assets are driven by a new era of quantitative and qualitative changes.
Guangdao Securities said, superimposed on the "weak dollar, Hong Kong dollar strong, RMB rebound" exchange rate conditions conducive to capital inflow and profitability expectations upgraded market risk appetite rebound, continue to optimistic about the medium-term Hong Kong stock bull market.
CBI International Managing Director and Chief Strategist Hong Hao said in a research report in June, in the March crash, the HSI touched the low point of the current cycle, and this low point is unlikely to be breached, A shares and Hong Kong stocks have long-term investment value. Among other things, A-shares and Hong Kong stocks may also be affected by the bursting of the U.S. growth stock bubble. But even with the impact, value investors won't turn down better prices.
In addition, it also said in its July report that top-down policies are generally very supportive of capital markets, although some technical details remain. At the same time, its quantitative analysis shows that globally, the extent to which value stocks have underperformed growth stocks has reached a historical extreme. As a result, value and cyclical stocks should start to outperform. For value investors, it is a long-term layout opportunity.