The Hang Seng Index opened 0.23% lower, and most of the technology and Internet stocks opened lower; biomedical stocks and mainland property stocks were active, and Cornerstone Pharmaceuticals rose nearly 4%.
Overnight market review
Recently, the volatility of global financial asset prices has increased.
On June 23, most of the world‘s major stock indexes fell, with Russia’s RTS index, Tokyo’s Nikkei 225 index, and Australia’s S&P 200 index falling the most, falling 1.53%, 1.45%, and 1.37% respectively.
The three major U.S. stock indexes closed down collectively. Most of the large technology stocks closed down. For example, Nvidia and Tesla, whose share prices doubled during the year, fell 1.9% and 3.03% respectively. Most Chinese concept stocks closed down, and Nasdaq China Golden Dragon fell 2.69%.
In terms of exchange rate, the volatility is still there, and there is no sign of stabilization. The U.S. dollar index hit a new high in a week, the Japanese yen fell for 6 days in a row, hitting a seven-month low, and the offshore renminbi fell to 7.22. On the interest rate front, U.S. Treasury yields fell on Friday, with the inverted spread between 2-year and 10-year U.S. Treasuries widening above 1%, considered a signal of recession.
High U.S. interest rates have dragged down manufacturing and other industries, while also causing multiple failures in the banking system, shaking market confidence. Fed Chairman Jerome Powell said this week that the U.S. could raise rates one or two times in 2023 despite the central bank’s refrain from raising rates last week, negatively affecting market sentiment. However, CME (Chicago Mercantile Exchange)’s FedWatch tool shows that the market expects another 25 basis point rate hike in July, and there is no possibility of Powell mentioning two rate hikes.
The German DAX index and the French CAC40 index all closed down for 5 trading days this week. European stocks had a poor week after economic data from Germany and France stoked fears of a recession in Europe, according to preliminary reports measuring the manufacturing and services sectors.
This week, several European central banks announced interest rate hikes, some of which exceeded market expectations, which contributed to the volatility of global asset prices. On June 22, the Swiss National Bank, the Central Bank of Turkey, the Bank of England, and the Norges Bank announced interest rate hikes.
Both the Bank of England and the Norges Bank raised interest rates by 50 basis points, both exceeding market expectations. The two central banks promised to continue raising interest rates.
As inflation and interest rate hikes continue to escalate, the haze of economic recession in many countries has resurfaced. Su Xiaohui, a special commentator for CCTV news, said that in terms of raising interest rates, the United States has stimulated the “wave of interest rate hikes” to some extent. The interest rate hikes between the United States and Europe are not synchronized. The European Central Bank seems to be a kind of “supplementary work” in terms of interest rate hikes, and is in the process of constantly catching up. To a certain extent, this reflects that the aggressive rate hike in the United States has brought more pressure on European countries, and Europe is forced to respond in an attempt to reduce its own losses.
In terms of safe-haven assets, affected by the rise in the U.S. dollar index, the price of gold fell by more than 2% in a week, hitting a three-month low. Silver prices fell for 5 days in a row, with a weekly decline of nearly 7%, also hitting a three-month low.
Regarding the market outlook of Hong Kong stocks, China Securities Investment Co., Ltd. released a research report stating that since 2023, under the multiple influences of overseas liquidity, Sino-US relations, and weak domestic economic recovery, Hong Kong stocks have all lost their gains before the Spring Festival, and their valuations have returned to . Very attractive level. At this point in time, many factors suppressing the Internet are marginally improving. Overseas, the Fed’s interest rate hike cycle may come to an end in the third quarter, and Sino-US relations are gradually easing.
On the domestic front, the endogenous growth momentum of the economy is weak but the general trend of recovery has not changed. Policy will be an important factor affecting domestic economic growth in the second half of the year. The profit growth rate of Hong Kong stocks is expected to moderate upward. In the past two years, the special rectification of the platform economy has made positive progress, and it will enter the stage of normalized supervision and management in the future. Innovation is the driving force behind the development of the Internet. The explosion of AI large models may be the beginning of a new wave of technology, and it is expected to dominate the next stage of the Internet industry growth.
Li Yu, CIO of Gaoteng International Equity, said that from the perspective of current Hong Kong stock investment, it is a relatively good opportunity in terms of probability and odds. On the one hand, the probability of a sharp downturn is very low, while the possibility of an upside is higher, and because the market sentiment is already in a downturn, the position is relatively low, and the odds are also very good. Such assets should provide better returns in the medium and long term. Risk-benefit ratio. If you reduce your position sharply at this point, you may avoid the pain of short-term fluctuations at the bottom, but it is also difficult to enjoy the joy of rising.
Zhongtai International believes that the Hang Seng Index has rebounded by up to 11.7% since the end of May. Investors have gradually shifted from paying attention to whether the policy will be introduced to what kind of specific policy will be introduced. As the profit forecast of Hong Kong stocks has been continuously revised down, and the Hang Seng Index predicts that the PE will rise to 9.9 times, the equity risk premium is at 50.9% since 2016, which is in a neutral position. Stronger policy stimulus and endogenous growth coordination.
However, American business leaders and high-level officials of the US government have visited China one after another, which is expected to bring warm wind to Sino-US relations. Under the background that Hong Kong stocks have a top on the upside and a bottom on the downside, it is expected that the Hang Seng Index will resume volatility in the short term, with the main fluctuation range between 19,000 and 20,800 points. With the implementation of detailed policies one after another, funds may be diverted to other sectors that benefit from national policies. It is expected that major industries such as consumption, technology, industry, and healthcare will perform better.
CICC said that the downside of the market is limited in the context of overall recovery of growth and the suspension of interest rate hikes by the Federal Reserve, but more room for upside still needs to be found to move from easy money to easy credit (at present, the main options are real estate and the central government. leverage).
If more substantive and effective positive policies are introduced, there will be more room for a rebound in the market. On the contrary, this round of rebound may not be fundamentally different from the previous mean-repair rebound, and the upside may still be constrained by the room for growth repair (the Hang Seng Index is around 22,000 points).
List of important news of Hong Kong stocks
Hong Kong youth representatives speak out in support of the Hong Kong National Security Law at the UN Human Rights Council
Rong Shiyun spoke at the UN Human Rights Council, supporting the implementation of the National Security Law in Hong Kong, and said that the legal rights of Hong Kong people are protected by the National Security Law. She emphasized that Hong Kong is a successful practice of “one country, two systems” and called on the international community to respect and support the views of Hong Kong youth.
Hong Kong Financial Secretary Chen Maobo: Cooperation with the People’s Bank of China on digital renminbi cross-border retail payments has entered the second phase of testing
Financial Secretary Chen Maobo said that Hong Kong has closer financial cooperation with the mainland, especially the Guangdong-Hong Kong-Macao Greater Bay Area, including businesses such as digital Hong Kong dollars and digital renminbi cross-border retail payments, and has also made positive progress in expanding funding sources.
A passenger plane in Hong Kong aborted takeoff! Emergency evacuation, 11 people were injured
In the early hours of this morning, a Cathay Pacific airliner in Hong Kong escaped due to a tire failure, and 11 passengers were injured and sent to hospital. At present, the Airport Authority of Hong Kong is assisting the injured passengers.
List of important news of Hong Kong stocks
1) Company news
CITIC Resources (01205): It is estimated that the semi-annual results ending in June 2023 will achieve a comprehensive net profit attributable to shareholders of HK$353-432 million, a year-on-year decrease of 52%-60%. This was mainly due to a significant year-on-year decrease in the average selling price of crude oil.
Gangxingye International (00480): Announced its annual results until March 2023, with revenue of HK$1.694 billion, a year-on-year decrease of 59.4%; net profit attributable to shareholders of HK$456 million, a year-on-year decrease of 58.5%.
Carrianna (00126): It is expected that the annual loss as of March 2023 will not exceed 190 million yuan, and the year-on-year profit will turn into a loss. The profit in the same period last year was HK$25 million.
GAC Group (02238): It plans to increase the capital of GAC Capital by 500 million yuan and provide GAC Mitsubishi with a loan of no more than 942 million yuan.
Haitong Securities (06837): It plans to invest 1.3 billion yuan to jointly establish a partnership with Guosheng Group and other third parties to invest in emerging industries.
Guotai Junan (02611): Subsidiary Guotai Junan Innovation Investment plans to contribute no more than 1.2 billion yuan to participate in the Pudong Leading District Science and Technology Innovation Fund No. 1.
Hisense Home Appliances (00921): Subscribed a total of 1.63 billion yuan in SPDB wealth management products.
2) Financing and repurchase dynamics
Tencent Holdings (00700): Spending about HK$402 million to repurchase 1.18 million shares, the repurchase price per share is HK$337.2-345.8.
MCC (01618): plans to issue no more than 150 million preferred shares and raise no more than 15 billion yuan to replenish working capital.
Haitong International (00665): Net financing of HK$1.16 billion was completed through rights issue.
AIA (01299): spent HK$132 million to repurchase 1,644,400 shares at HK$79.40-81.00 per share.
Cheung Kong Group (01113): It spent HK$102 million to repurchase 2,336,500 shares at a price of HK$43.45-44.00 per share.
This article is compiled from “Tencent Self-selected Stocks”, edited by Zhitong Finance: Chen Wenfang.
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