The news of Chinese stocks returning to Hong Kong stocks is getting more and more intense
It is said that the Hong Kong Stock Exchange (00388) is seeking about 50 Chinese stocks to return to Hong Kong for a secondary listing. If the successful example of Alibaba (09988) can attract a large number of large Chinese stocks to land in Hong Kong stocks, and the history of high Chinese stocks will be high, if these stocks are listed in Hong Kong one after another, it will be expected to further activate the trading of Hong Kong stocks and improve Overall market structure.
Ali’s successful listing in Hong Kong has provided a perfect example for other potential Chinese stocks returning to Hong Kong, which triggered the market’s recent speculation in the concept of Chinese stocks returning. Daxing Goldman Sachs quoted the management of the Hong Kong Stock Exchange as saying that the Hong Kong Stock Exchange has regarded 40 to 50 Chinese stocks as targets to attract them to return to Hong Kong.
Although there is no list of these 50 target stocks at present, the large stocks that are favored by the Hong Kong Stock Exchange are bound to be. In fact, the Hong Kong Stock Exchange revised its listing rules in 2018 to allow mainland companies to list in Hong Kong in the form of a secondary listing, but the threshold is very high and must be the main market in the high-end markets (NYSE, NASDAQ or London Stock Exchange). Listed with a market value of not less than HK $ 40 billion, or at least HK $ 10 billion and a revenue of at least HK $ 1 billion in the most recent year.
The turnover rate of Chinese stocks is much higher than that of Hong Kong stocks
At present, there are more than 200 Chinese stocks listed in the United States. Excluding Ali that has arrived in Hong Kong, based on the average market value of the past year, 21 stocks have a market value of more than 40 billion Hong Kong dollars, which basically meets the requirements of the second listing Conditions, many of which are familiar to Hong Kong people, including JD.com, Pinduoduo, Baidu, Netease, and Ctrip. The market has already reported that Baidu, Netease and Ctrip intend to seek a secondary listing in Hong Kong. The total market value of these 21 Chinese stocks is close to HK $ 3 trillion. If most of them come to Hong Kong in the end, the value of the Hong Kong stock market will increase.
In addition to high growth and high valuations, another feature of these large-scale medium-sized stocks is the smooth trading. The turnover rate of the shares (that is, the relative market value of the entire year) is much higher than that of Hong Kong stocks. The average annualized turnover rate of these 21 Chinese stocks reached 220%, while the annualized turnover rate of Hong Kong stocks last year was only slightly higher than 40%. If these brisk trading shares come to Hong Kong, it is expected to activate the trading of Hong Kong stocks as a whole.
Of course, the second listing of Chinese stocks in Hong Kong may not be able to maintain the turnover rate of US stocks, but Ali has made an excellent example. Since the listing of Ali in Hong Kong, the transaction has remained strong. Based on Ali’s registered shares in Hong Kong, which account for about 22% and a market value of more than HK $ 1 trillion, the annualized turnover rate is about 50%. Although it is lower than the US stock’s turnover rate of 150%, It is higher than the average of Hong Kong stocks and 43% of Tencent (00700). If China’s Hong Kong and China stocks maintain high liquidity in the future, it will hopefully boost the trading sentiment of Hong Kong stocks.
HSI is expected to become a Zengke component
In addition, Hong Kong stocks are currently dominated by financial stocks, which account for nearly 50% of the market value of the HSI, similar to the overall Hong Kong stocks. The HSI company indicated whether it intends to have the same shares with different rights and secondary listed shares before the Lunar New Year, and whether they are eligible for inclusion in the HSI. With the support of market users, Ali, Meituan (03690) and Xiaomi (01810) are expected to be dyed blue as soon as May. After returning to Hong Kong, other large medium-sized stocks are also expected to join the HSI and increase the share of technology stocks. Refers to the proportion of Hong Kong stocks.
At present, the Hang Seng Index contains only Tencent, an information technology network stock, with a market value ratio of about 10%, which is incompatible with the trend of the global stock market dominated by technology stocks. In contrast, information technology stocks accounted for more than 23% of the US stock market’s S & P 500 index and financial stocks accounted for less than 13%. I believe it can explain why Hong Kong stocks have underperformed in recent years.