[What do you know about Tam Sir] Hong Kong stocks are still in the early stages of the bull market? These three changes are worth paying attention to!

Since May 20,$Hang Seng Index (800000.HK) $Takami dropped his head down after 19706. $ Hang Seng Technology Index (800700.HK) $It also missed the 4000 point mark, and many investors were concerned about this trend.

The reason for this is that the index started to fall from 22700 points last year,At the moment, it is just past the rebounding gold ratio of 0.618，From a technical analysis point of view, the index failed to confirm a further recovery.

Whether Hong Kong stocks will continue to fall again is a question of concern to many investors. To that end,Tam Sir maintains view that Hong Kong stocks are currently in the early stages of the bull market, give a specific interpretation below.

1. Significant improvement in liquidity

For the market crash earlier this year, Tam Sir's earlier article“The bottom of Hong Kong shares? How to deploy next?”It should be noted that the index fell below two standard deviations in the yield channel at the beginning of the year, mainly due to market volatility caused by some of the mainland's snowball investment products (complex derivatives). Liquidity risks caused the market to be subdued for some time.

Since mid-April, some institutional investors have changed their view of Chinese stocks, and Hong Kong stocks have not only entered a technical bull market, but trading across the index has also improved significantly.

As can be seen from the performance of the Hong Kong currency exchange, the return of funds is quite evident. On May 16, there were more one-day transactions of 2048 billion dollars. While the last two days showed a solid high, there was a decrease in the amount of transactions, which is typical of “rising markets trading large, falling markets trading less”.

Some more conservative trading sentiment has changed recently, such as the recent change from its 16000 point target price at the end of the year earlier to 22500 points in the next year (this is not a recommendation to look at the target price, but a reference to the change in the Bank's view of the market, which in the long term will not make much sense as the market changes).

A change in the market's view of Chinese stocks is the main reason for the reversal of liquidity risks across the market.

2. KEEP YOUR FINGER ON THE PATH OF VALUATION CORRECTION

As you can see from the above benchmark earnings channels, the index has recently returned to its 10-year average. Simply put,IF HANG REFERS TO THE AVERAGE OVER THE PAST DECADE, IT HAS ALREADY BEEN INEXPENSIVE, AND MARKET EARNINGS HAVE RETURNED TO LEVELS CLOSE TO 10 TIMES.

But on a closer look, you can see from the above graph that the entire market earnings channel has started a downward trend since 2019, which means thatEarnings per share for the past five years have continued to decline, which is the main reason for the bear market over the past five years.

However, this market earnings channel's decline over the past year has begun to take a breather, looking at recent heavyweight blue-chip results, including $ Tencent Holdings (00700.HK) $、 $ HSBC Holdings (00005.HK) $、 $ China Mobile (00941.HK) $Profitability and return on equity have also improved significantly, and a series of feedback shareholder policies and cost control policies implemented by management are beginning to take effect.

For example, recent articles“Tencent's Q1 results beat expectations and the share price is expected to reach $400?”Mentioned $ Tencent Holdings (00700.HK) $With a good profit outlook, Tan Sir mentioned a more exaggerated target price in the lecture.

As the macroeconomic environment improves, the future profitability of many companies is expected, which will lead to higher levels of challenge for Hong Kong stocks.

To put it simply,When the next benchmark reaches 22700 pips again, the forecast market earnings are likely to be cheaper than the valuation level of January 27, 2023, and the path of valuation correction is the core logic of this round of upswing.

3. Funds begin to circulate in different blocks

Even though $Hang Seng Index (800000.HK) $The callback starts at 19706, butFunds are still looking for investment opportunities in different segments, which is the biggest difference from the performance of the past few years.

For example, recent transactions in house blocks and photovoltaic blocks。 The different types of segments of Hong Kong stocks are now more easily hyped if they involve a few stories or topics, and the whole atmosphere of investment and speculation is very different from what it used to be.

In addition, we can analyze and understand market reactions from individual easing events.

🚕 Big fall after ideal car performance

Indeed, there are also downside news from individual companies that cause share price shocks, such as $ IDEAL CARS -W (02015.HK) $The stock price fell sharply after the results, but this was mainly due to the company's sluggish MEGA car sales this year, which is $ IDEAL CARS (LI.US) $Operational strategy issues, not industry-related issues.

Some traditional car companies such as $ Great Wall Motor (02333.HK) $The market has been good this year, after recent results $ Xiaopeng Motor -W (09868.HK) $ $ Xiaopeng Motor (XPEV.US) $It is also being sought for funds,The reaction of the market to the industry will no longer be as pessimistic as last year, it will not be just about price and money as a matter of word of mouth.。

🛒 After the results of Kyoto, the issuance of convertible preferred notes is pumped out

KYOTO GROUP ANNOUNCED ON THE STOCK EXCHANGE THAT IT PLANS TO ISSUE US$15 BILLION OF CONVERTIBLE PREFERRED NOTES MATURING IN 2029 WITH A TOTAL PRINCIPAL AMOUNT, CAUSING THE SHARE PRICE TO DROP BY 4%.

A company's pumping action can indeed trigger a stock price short line adjustment. However, the personal view isCFFs (Cash Flows from Financing Financing) are expected to improve as the market climate improvesIn addition to the continued use of share buybacks by these technology companies over the past year as a means of returning shareholders, the actual dilution effect will be limited,The market is more concerned about whether these leading companies can regain earnings growth.

Small summary

Hong Kong stocks are likely to remain bullish after the short term. The short-term trend of Hong Kong stocks is still more complex, but many investment opportunities remain without excluding individual segments and stocks.

As Hong Kong stocks improve, Tam Sir will hold a talk on investing in Hong Kong stocks in physical stores on 27 May with Alvin, Director of UBS Equity Derivatives Sales (click on the image below orThis linkSign up today and explore the same hot stocks and blocks to find investment opportunities! Welcome all mooers to participate in our friendly friendly program to receive benefits!

Event Target: Hong Kong Residents Only Participate

(Client is the Chief Analyst of Futu Securities @Po Chile: Licensee, Others and Other Affiliates and No Financial Interests of the Offering Issuers Listed Above)

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