Entering the first trading day of 2020, the author first wishes everyone a happy New Year
The first four months of last year was the best month for Hong Kong stocks. The Hang Seng Index rose to a maximum of 30,280 points. However, the market conditions have repeatedly declined since then. Only in December last year, Hong Kong stocks gradually became clear in the Sino-U.S. Trade talks and stimulated by the pursuit of technology stocks For the better, the HSI and HSCEI closed at 28,190 points and 11,168 points last year, respectively, up 9.1% and 10.3% from the end of 2018. However, due to the impact of political and social events, the performance of the whole year still lags behind the major European and American and Asian stock markets. Even if the Mainland directly faces Sino-US trade issues, the performance of the mainland stock market also outperforms Hong Kong stocks.
This year, Hong Kong stocks will continue to be affected by news of Sino-US trade talks
The signing of the first-phase trade agreement between the two sides will help alleviate the pressure on relations between the two countries and the economic slowdown. However, the implementation of the agreement between the two sides is still controversial. Improved. The economy and corporate profits in Hong Kong still depend on the development and impact of demonstrations. The US Federal Reserve is expected to maintain the current low interest rate this year, which is also beneficial to the capital market.
The current valuation of Hong Kong stocks is not high
In addition to the motivation of technology stocks, it is beneficial for the HSI to try another 30,000 points. Real estate and rent-receiving stocks with strong local economic correlation are still difficult to perform. With limited pressure on the index, the 25,000 level of the HSI should be supportive. Due to the repeated development of Hong Kong’s political economy and Sino-U.S. Trade issues, the HSI is expected to maintain a range of 5,000 points throughout the year. The overall investment situation is still similar to that of last year, and it is biased towards “no stock market speculation.”
The author has previously analyzed that one of the key investment themes of Hong Kong stocks this year is technology-related stocks, and its central choice is 5G, mobile phone and chip stocks. Other good sectors include China’s housing, autos, and new economic stocks that gradually narrowed their losses or turned losses into profits.
The central government has recently introduced a household registration reform policy to remove restrictions on the settlement of cities with a permanent population of less than 3 million in urban areas and relax the conditions for urban settlements of 3 to 5 million in the urban area. The settlement policies of other large cities must be streamlined to encourage regional mobility and urbanization. The author believes that the new policy must depend on the purchasing power of the new resident population and must also be supported by supporting policies. Urban housing needs, but long-term development will help alleviate the oversupply of commercial housing in these cities and also improve the current imbalanced development of cities.
On the other hand, the People’s Bank of China also announced to deepen the reform of interest rate liberalization. Following the request of the new domestic bank loan in August last year to reference the LPR (market quoted interest rate) pricing, the People’s Bank of China announced a few days ago to include existing loans (including housing stock loans) into the LPR scope And set the benchmark for completing the pricing before August 31 this year. The interest rate liberalization reform has lowered interest rates downwards, and mortgage interest expenses are expected to decrease. However, the housing in third- and fourth-tier cities still needs time to implement and produce results. Therefore, at this stage, the author still favors medium and large-sized domestic property stocks, and maintains the promotion of China Aoyuan (3883), Xuhui Holdings (884), China Resources Land (1109) and Longhu Group (960).