2024-03-01 06:29:32
Last year, foreign investors heavily downplayed Chinese stocks, and the mainland and Hong Kong stock markets lost a lot of blood. In fact, the mainland economy was regarding the same as expected, with a full-year growth of 5.2%, which was similar to outside estimates. However, foreign investors’ estimates of Chinese stocks have fluctuated significantly. Morgan Stanley recently issued a report saying that the pressure of capital outflows from China’s onshore and offshore stock markets has basically come to an end, but it will take time for capital to flow back significantly.
Morgan Stanley reported that the proportion of foreign ownership of A-shares dropped to the level between August and September 2009. Since the beginning of this year, capital outflows from the Chinese stock market are estimated to total approximately US$3.6 billion, with European active funds being the main sellers. Morgan Stanley said that the market stabilization measures introduced by the mainland since the end of January this year have had a positive impact, but due to macro uncertainty and rising interest rates in the United States, capital inflows may be limited in the short term.
Morgan Stanley also said it is concerned regarding China’s upcoming policy increases, support for the private sector, structural reforms, macroeconomic improvement and inflation, and believes that it will become a catalyst for an early recovery.
Morgan Stanley has changed from a downbeat to a positive one. In fact, as I said earlier, foreign funds have returned to the Chinese and Hong Kong stock markets before the Lunar New Year. According to Morgan Stanley’s report, the improvement in the stock market is mainly due to the introduction of policies to support the economy and the stock market. But in fact, last year In the second half of the year, the mainland has continued to take measures. Although the intensity continues to increase, it is not a sudden move. However, foreign investors seem to suddenly wake up following the New Year and start to sing the praises of Chinese stocks.
Foreign investors suddenly sing good news and then sing bad news. These behaviors make people wary. We must be careful that the stock market has cycles, and it does so every year. Every year is a time when the stock market performs well, especially from the end of February to March, when large companies begin to announce their results, most of which are in line with expectations. Chinese stocks pay larger dividends. Retail investors see the good news and enter the market to pick up goods. Large investors tend to be in these markets. Time to ship. Large traders hold a lot of goods and the market atmosphere is poor, so it is difficult for them to sell goods in large quantities, so these times are often when they sing best.
CCB 5-year chart.
Looking back at the heavyweight stocks, taking China Construction Bank (0939) as an example, they fluctuate within a certain range every year. Although they saw a low of 4.01 yuan last year, in the long run, they fluctuate up and down every year, such as the high of 6.5 yuan in 2021. The low is 5.1 yuan; the high in 2022 is 6.2 yuan, the low is 4.2 yuan; the high in 2023 is 5.7 yuan, the low is 4.01 yuan. According to this trend, the current price of CCB is 4.88 yuan. This year, there is a chance to test the high of 5.2 yuan. If the trend is better, it can reach 5.6 Yuan, but don’t expect the stock market to rise in a straight line, and don’t fully believe in the good estimates of foreign investors. Those who are long-term investors can ignore it, and those who are short-term investors will see good results. If you buy large stocks and there is an increase of more than 20%, you may as well sell them to gain profits. profit.
(Lu Yuren’s “Financial High Tea” column is published exclusively on “Pomegranate Station” every Monday to Friday. You are welcome to subscribe to Pomegranate Station to receive it)
Riku Yujin
**Blog articles are written at your own responsibility and do not represent the position of our company**
After the Lunar New Year, the Hong Kong stock market regained its vitality and showed an upward trend.
Recently, I had a conversation with the boss of a large mainland financial group. He noticed that before the Lunar New Year, foreign funds entered Hong Kong and bought Hong Kong stocks following the Lunar New Year holiday. Some also went north through Hong Kong to buy A-shares.
His statement confirmed the trend of the market. With external funds buying goods, Hong Kong stocks are slowly rising. I asked whether these funds are a comprehensive change of views on Hong Kong stocks, or are they just short-term speculation?
The boss of the financial group said that he tentatively estimates that these funds are mainly for short-term speculation, so we cannot expect that the Hong Kong stock market will continue to rise. However, if the trend becomes stronger in the short term, speculation will turn around.
I say this is also in line with the logic of foreign capital. In fact, Hong Kong stocks are subject to speculation at the beginning of every year. By the end of February and March, large companies have announced their results, performed satisfactorily, and announced dividends. Nowadays, large state-owned enterprises in the mainland often pay dividends of 6 to 8%. , or even 10 centimeters. After the results are announced, retail investors will be attracted to enter the market. At that time, it is the time for large investors to ship goods. Because they hold a large amount of goods and there are no retail investors to take delivery, it will be difficult for them to leave the market. Therefore, now that foreign investors are entering the market to buy goods, Hong Kong stocks are relatively strong, and it is only a short- to medium-term trend for the time being.
I asked the big investors what stable stocks they might buy. The financial group manager said that the stock market is currently in turmoil, the mainland economy is slowing down, and foreign countries are badmouthing Chinese stocks, so the risk of buying stocks is not low. From his perspective, they all buy large state-owned enterprise stocks with high dividends, such as China Mobile (0941), Industrial and Commercial Bank of China (1398), China Construction Bank (0939) or China Merchants Bank (3968).
He said that the mainland’s big banks are the business card of the country, and they will not be embarrassed. However, due to the mainland’s interest rate cuts, bank interest margins are under pressure, so valuations are difficult to be very high, and most of them fluctuate up and down. Taking China Construction Bank as an example, the dividend payout is 8.5%, and following deducting dividend tax, it is 7.6%. It is quite good to buy it as a bond.
CCB one-year chart.
By the way, these large state-owned enterprise stocks have risen for a while, and it is risky to chase them at current prices. Take China Construction Bank as an example, the 52-week low is 4.01 yuan, and the current price is 4.98 yuan. It has risen a lot. Instead, wait until the results are announced. If the stock price rises once more, It’s time to see the high and sell.
One-year chart of CNOOC.
The conclusion is that funds are returning to the market in the near future, and the stock market is slowly rising, but don’t be too optimistic, it is not the time to jump into the market. If the market rises to this level, the stocks bought at low prices will have a return of more than 20%, and you can sell them at a higher price to make a profit. For example, CNOOC (0883), which I recommended buying in January this year, had a stock price of 13.4 yuan at that time. Now it has risen to 16.3 yuan, an increase of more than 21% from the purchase price. In fact, you can reduce part of the holding first and keep the other part. When the results are announced and the price rises once more, you can also make profits by shipping. Of course, if you still want to lose shares and there are dividends, you can hold them for the long term.
(Lu Yuren’s “Financial High Tea” column is published exclusively on “Pomegranate Station” every Monday to Friday. You are welcome to subscribe to Pomegranate Station to receive it)
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