Leading high interest bonds, nearly 2%, and increased resistance

The Hang Seng Index fell 422 points yesterday to close at 26,466 points, with a turnover of 75.4 billion yuan

The market is again affected by trade negotiations. The report said that China and the United States may not be able to sign a first-phase agreement within this year, reflecting that the two sides have considerable differences. US stocks have fallen, and Asian stock markets have followed. The Hong Kong stock market has fallen more than 500 points in the first period. Later, Liu He, the vice premier of the State Council, said that he was cautiously optimistic about the negotiations, but he was confused about the US request, and the decline of Hong Kong stocks narrowed. Last night, it was reported that Liu He had sent an invitation to the US representative, Wright Heze, to China for consultations last week, and it has risen more than 100 points in the night. After the show ( 0823 ), the stock price was weak, and it even fell below the 80 yuan mark. However, the gap between the forecasted dividend yield and the US 10-year bond yield has risen to nearly 2%. The current price has already reflected quite a few unfavorable factors. The resilience of 80 yuan or less is getting bigger.

The basis for the market recovery is the Sino-US trade war ceasefire and the global central bank cut interest rates and release water. The former seems to be not very smooth, and the stock market has also adjusted back. If the obstacle to negotiation is the amount of Chinese purchase of US agricultural products, China is actually very difficult to make concessions. Only when President Trump makes a compromise, there is a chance to solve it, which is unpredictable and analyzable. Because of the previous breakdown of negotiations, Trump said a few words, not long after the issue of tariffs, investors are now more nervous, the short-term market will be quite volatile.

In the trend, the Hang Seng Index rebounded after the low level in November, but even if it was calculated at the lowest level, it still held the uptrend and the technical form did not turn. It’s just that Trump said that he changed his face and changed his face. If the negotiations are broken, he will have a big chance to break down. At this stage, he can only wait. Relative to Hong Kong stocks, A-shares and US stocks are still strong. Even Japan, South Korea and Taiwan and European stock markets are not bad. The author still recommends buying more stocks in other regions.

Stock performance in other regions wins Hong Kong stocks

The Link Exhibition announced its results earlier. Although the stock price is already at a low level, the market reaction is still average. In the six months to the end of September, the total retail sales of Hong Kong’s portfolios increased by 8.9% year-on-year, and the rent adjustment rate for renewals fell to 18.1%. The average monthly retail sales of merchants increased by 1.4%, still outperforming the overall market and reflecting the actual demand for the property. However, with an increase of about 18% in rent, the general contract is calculated for three years, and the annual increase is reduced to 6%. It cannot be said to be bad, but the growth momentum is slowing down. In particular, Hong Kong’s economy has been quite satisfactory in the past three years. Even in recent months, residential property prices have increased by 26.4%. If the future can only be at a high level and the wealth effect is weakened, then the rent increase will be more limited.

Another problem is that the unemployment rate is starting to rise. An invincible theme of the exhibition is that the minimum wage is rising, the income of the grassroots citizens is rising, and the housing market is naturally subject to constant rent increase. Now that the unemployment rate is starting to rise, there is often a continuous process. The minimum wage will remain flat in the next period of time. It can be expected that the rent increase will slow further.

Leading the Mainland’s business ideals

Of course, this is more or less reflected in the stock price. The difference between the shareholding ratio of the Link and the 10-year bond in the United States was generally between 1% and 1.5%, but it was nearly 3.7 per cent at the end of March 2020, compared with the current bond yield of only 1.73%, the difference was 2%. At a level that rarely occurs, valuations have fallen to attractive levels. In addition, in June this year, Link has announced plans to repurchase 60 million units. By the end of September, it will repurchase about 13 million units at an average price of about 87.3 yuan, involving about 1.1 billion yuan. The book value per share of Link is about 90.6 yuan. It has always been shot below the book value. The lower the stock price, the greater the repurchase.

Although the outlook for Hong Kong has deteriorated, the Mainland business of the Link has performed well. The average renewal rent adjustment rate of the retail property portfolio continued to be high, reaching 31.5%. The Group’s past acquisitions were concentrated in the lower-tier cities, but the future will be extended to the surrounding areas of first-tier cities such as the Bohai Rim, the Yangtze River Delta and the Dawan District. Overall, the possibility of a rebound in the exhibition is temporarily limited, but the defensive power below 80 yuan is getting stronger.


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