A-shares experienced a more intense surge before the National Day holiday, giving a resounding slap to all A-share bears.
Hong Kong stocks rose significantly during the National Day holiday, slapping all China asset bears.
Hong Kong stocks soared during the National Day, amplifying the fear of missing out.
The latest data from iFind shows that during the National Day holiday, the main indices of Hong Kong stocks all saw significant increases: the Hang Seng Index rose by 9.3%, the Hang Seng Technology Index increased by 13.4%, and the Hang Seng Healthcare Index surged by 11.1%. However, the increases in the China Securities Hong Kong Stock Connect series of indices were even greater: the Hong Kong Stock Connect Technology Index rose by 15.1%, the Hong Kong Stock Connect Consumer Index increased by 11.9%, and the Hong Kong Stock Connect Healthcare Index rose by 10.6%.
In comparison, since the Federal Reserve's interest rate cut on September 18th, A-shares and Hong Kong stocks have led the global market, while U.S. stocks and commodities, with the exception of a few varieties, have shown a clear downward trend.
Looking at the whole year, as of October 7th, among the global main indices and major asset classes for the year, the China Internet 50 led the global increase with a 51.2% gain, followed by the Hang Seng Technology Index at 47.7%, the Hong Kong Stock Connect Consumer Index at 45.9%, and the Hong Kong Stock Connect Technology Index at 40.1%.
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Overseas capital has a strong desire to allocate Chinese assets.
Global interest in Chinese assets has risen significantly. Whether through blue-chip stock increases, options tools, or through ETFs, international investors are betting that the Chinese market will see a strong rebound.
Ray Dalio, founder of the world's largest hedge fund Bridgewater Associates, believes that China's economic stimulus measures will become a historic turning point. Currently, Chinese asset prices are low, and investors are scrambling to bottom-fish, activating the market's "animal spirits".According to data from the Hong Kong Stock Exchange, the top US investment bank JPMorgan Chase: on September 25th, it increased its holdings in China Merchants Bank by 895 million Hong Kong dollars; on September 26th, it increased its holdings in Ping An Insurance by 1.771 billion Hong Kong dollars; on September 27th, it spent more than 4.1 billion Hong Kong dollars to buy BYD, Hong Kong Exchanges and Clearing, China Pacific Insurance, and Tsingtao Brewery.
A widely circulated Bank of America trading desk document shows that global investors are trying to scoop up shares before the National Day holiday. CTAs have bought $15 billion in the past two weeks (a historical high), and hedge funds have shifted funds from the Asia-Pacific region to China, but US accounts are still on the sidelines.
According to data from BNP Paribas, in the first three weeks of September, more than $20 billion was withdrawn from the Japanese stock market, while the stock markets of South Korea, Indonesia, Malaysia, and Thailand also saw net outflows last week.
On October 2nd, the Hong Kong stock market surged across the board, while the Nikkei 225, South Korean Composite Index, Mumbai Sensex 30, and FTSE Malaysia Composite Index, among other Asian market indices, experienced adjustments to varying degrees.
The Bank of America trading desk document shows that Bank of America expects A-shares to be significantly revalued compared to H-shares, with the turnover ratio of margin trading accounting for more than 10% of the total turnover, but still far below the 18% in 2014.
Bank of America expects this market trend to be even larger than that of 2014-2015 because: in the two years before 2014, household bank deposits increased by 15 trillion yuan, and before this rebound, bank deposits increased by 40 trillion yuan, with a large amount of cash still on the sidelines in the market.
HSBC analysis believes that A-shares are currently undervalued by 15%. Morgan Stanley expects that fiscal stimulus measures may drive A-shares to rise by 10%-15% further.
What to buy after the holiday opening in the Hong Kong stock market?
Two points need to be considered here: ① If you buy, buy the ones most favored by foreign capital, with the strongest trend and the highest certainty of catch-up. ② Currently, buying industry indices, it's meaningless to be entangled in the weight of component stocks, what's important is to "get on the train in time and increase positions".
Hong Kong-related ETFs are likely to be unavailable, but arbitrage can be done through offshore linked funds. Because cross-border ETFs and domestic exchange regulations are consistent, there is a 10% limit on daily price fluctuations. If the fluctuation of the index of cross-border ETFs exceeds 10%, it will be made up over several trading days of the ETF.Looking at the trend of Hang Seng stocks during the holiday, the strongest performing, most certain to catch up, and most favored by foreign capital are the Hang Seng technology and Hang Seng consumer sectors. For those who like technology: China Securities Hang Seng Connectivity Hong Kong Technology ETF (159751), with an external connection (Class A: 021294; Class C: 021295) $Hang Seng Technology ETF (SZ159751)$.
For those who prefer consumer goods: China Securities Hang Seng Connectivity Hong Kong Consumer Goods ETF (513590), with an external connection (Class A: 016952; Class C: 016953) $Hong Kong Consumer Goods ETF (SH513590)$.
For those who favor pharmaceuticals: China Securities Hang Seng Connectivity Hong Kong Pharmaceutical ETF (513700), with an external connection (Class A: 021088; Class C: 021089). Of course, for those who like low valuation and high dividends, consider the Hang Seng Connectivity China Securities Hong Kong Bank LOF, with an external connection (Class A/C: 501025/010365).
Why choose Hang Seng Connectivity series indices? From a trading game perspective, in the history of A-shares, when the same stock soars in Hong Kong stocks, it often leads to an influx of A-share capital until the AH premium of the stock reaches a delicate balance. It can be determined that after the holiday, AH shares will attract a large amount of funds to grab shares.
If Hang Seng ETFs are not available due to a limit-up, it is recommended to consider buying the corresponding external connection codes to grab shares directly.
Why do foreign investors like the technology sector? Because it belongs to China's core large-cap assets, with a heavy focus on the internet industry, policy risks have been lifted, profits are recovering, shareholders are repurchasing, innovation capabilities are strong, and the reputation is also high.
Recently, the China Dragon ETF (DRAG) has been listed on the US stock market, which packages the leading Chinese internet technology companies. Its current components include Tencent, Pinduoduo, Alibaba, Meituan, BYD, Xiaomi, JD.com, Baidu, and NetEase, benchmarking against the seven sisters of the US stock market.
According to the BofA trading desk document, the current influx of passive funds from overseas is high, while the influx of active funds is low, indicating that active funds are hesitating. In addition, there are quite a few short-term profit-taking positions in hedge funds, which have the urge to take profits, which may lead to increased volatility in Hong Kong stocks after the holiday.
How sustainable is the market trend? How to respond if it falls?
A bull market is built on funds, and big bull stocks/markets are the resonance of policy, capital, sentiment, fundamentals, and trends.At present, although the policy, sentiment, and trend sides are heavily bullish, the capital side is short-term bullish, and the fundamentals have not improved significantly.
Subsequently, we need to pay more attention to the capital situation.
Currently, liquidity is abundant, and market risk appetite has obviously increased. Here, it is necessary to abandon the bear market mentality—bull markets focus on momentum, while bear markets focus on quality.
Perhaps, as Soros said: The history of the world economy is a continuous drama based on illusions and lies. To gain wealth, the approach is to recognize the illusions, participate in them, and then exit the game before the illusions are recognized by the public. The Hong Kong stock market has been adjusted for more than three years, with ample adjustment space and time. Short-term washing of floating chips can lead to better increases, which is like reversing the car to pick up passengers. Those who are already on the car should not rush to make random moves... Let the bullets fly for a while.
If the car reverses to pick up passengers after the festival, I would like to talk about the directions I think are reliable:
① Basic position: It is essential to have a configuration of broad-based indices such as the ChiNext, Shanghai-Shenzhen 300 ETF (159673), and China Securities 800 ETF (159800); ② Rebound pioneers: Growth potential + low price—Hong Kong Stock Connect Pharmaceutical (513700), Chuang 50 ETF (159681), off-exchange connection (A class: 018482; C class: 018483), STAR Market 100 ETF Fund (588220), off-exchange connection (A class: 019861; C class: 019862), Hong Kong Technology ETF (159751), off-exchange connection (A class: 021294; C class: 021295) ③ Hong Kong technology stocks: Funds that have just come out of the continuous rise of US technology stocks will start from familiar industries, and A-H technology stocks may become the focus.