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In the just past year of 2021, the Hang Seng Index in Hong Kong fell by 14% for the full year, the Hang Seng Tech Index and the Nasdaq Golden Dragon Index representing Chinese concept stocks both fell by 33% and 43% respectively for the year, significantly underperforming the stock markets in the US, Europe, and even emerging markets. Furthermore, if we extend the timeframe a bit further, since 2018, the Hang Seng Index has dropped by 20%, the Hang Seng Tech Index and the Nasdaq Golden Dragon Index fell by 6% and 30% respectively, also significantly lagging behind A-shares and other major developed as well as emerging markets during the same period. It is necessary for us to reevaluate the investment opportunities in Hong Kong stocks, and in this regard, I will delve into this topic.
1. What are the reasons for the heavy losses in Hong Kong stocks?
In our view, there are four main reasons for the significant decline in Hong Kong stocks:
Since 2018, affected by various factors, the Sino-U.S. relations have been relatively turbulent. The Hong Kong market, due to its special status as a link between China and the West, has been more impacted.
Overseas institutions have concerns about the domestic regulatory policies in related industries. Over the past year, our country has implemented unprecedented strong supervision in industries such as K12 education, internet, and pharmaceuticals. In the long run, these measures are conducive to encouraging and regulating market competition, promoting the healthy growth of youth, and fostering common prosperity. However, in the short term, they inevitably cause certain market impacts.
Last year, the U.S. SEC passed the Holding Foreign Companies Accountable Act, involving the review of core information such as audit workpapers of Chinese companies listed in the United States. At the same time, the disclosure requirements regarding the VIE structure of Chinese companies listed in the U.S. and whether the Chinese government approves related companies to list in the U.S. are fully disclosed. This has led to both domestic and foreign investors...
1. What are the reasons for the heavy losses in Hong Kong stocks?
In our view, there are four main reasons for the significant decline in Hong Kong stocks:
Since 2018, affected by various factors, the Sino-U.S. relations have been relatively turbulent. The Hong Kong market, due to its special status as a link between China and the West, has been more impacted.
Overseas institutions have concerns about the domestic regulatory policies in related industries. Over the past year, our country has implemented unprecedented strong supervision in industries such as K12 education, internet, and pharmaceuticals. In the long run, these measures are conducive to encouraging and regulating market competition, promoting the healthy growth of youth, and fostering common prosperity. However, in the short term, they inevitably cause certain market impacts.
Last year, the U.S. SEC passed the Holding Foreign Companies Accountable Act, involving the review of core information such as audit workpapers of Chinese companies listed in the United States. At the same time, the disclosure requirements regarding the VIE structure of Chinese companies listed in the U.S. and whether the Chinese government approves related companies to list in the U.S. are fully disclosed. This has led to both domestic and foreign investors...
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