Hong Kong stocks have under performed major stock markets in the Asia-Pacific region this year
Hongye, director of the Bank of Communications International Research Department, said that Hong Kong’s economy still faces great challenges, lack of investor confidence, coupled with the acceleration of the internationalization of the mainland financial market, and continued to attract foreign investment. Opportunity to underperform A shares, even if the current valuation of Hong Kong stocks is cheap, there is still no catalyst.
Demonstrations in Hong Kong continue, with retail sales falling by 24.3% in October. Hung Hom warned that if the situation does not improve, the unemployment rate in the retail, catering and related industries will further deteriorate in November and December, and affect business investment. And personal consumer confidence, the biggest risks in the coming months will be unemployment and the lack of a clear direction for the economy.
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Hong Kong stocks are also affected by the local economy. Hong Ye agrees that the current valuation is very cheap. Only 10% of the time in the history of Hong Kong stocks is lower than the current value. Investors are expected to buy it because of this, but the overall lack of catalysts to reverse the disadvantage. In addition, the accelerated internationalization of the Mainland financial market has increased the substitutability of A shares for Hong Kong stocks.
In terms of the Mainland economy, he believes that economic growth below 6% next year is no suspense, but the uncertainty of inflation is higher
At present, African swine fever is spreading in China, resulting in a shortage of pork supplies and soaring prices, which has fueled inflation. Hong Ying pointed out that swine fever virus mutates at any time, and it takes 10 to 12 months for piglets to grow, so stagflation is the biggest risk.
The bank announced its investment outlook for 2020. In the next 12 months, the bottom of the trading range of the Shanghai Index may be about 2700 points. It is recommended to buy Ping An (02318), Long Guang Real Estate (03380), Meituan (03690), and Shenzhou International (02313) ), CSPC (01093).