Funds continue to flow in! Nikkei Mainland China and Hong Kong stocks win favor with investors on economic recovery

The Hong Kong stock market closed higher today (9th) together with the Chinese stock market. Hong Kong stocks retreated for 2 days and then made a strong advance again. The Hang Seng Index (HSI) and the Hang Seng Technology Index closed up 1.22% and 1.95% respectively. This was mainly because after Hangzhou, Xi\’an today It also announced the complete cancellation of housing purchase restrictions, continuing to provide stimulus to China\’s real estate market. Some people point out that European and American foreign capital is returning from the Japanese stock market to the undervalued Chinese stock market, but others believe that the signs of overheating in the Chinese stock market are increasing.

The Hong Kong stock market joined hands with the Chinese stock market to close higher today (9). The Hong Kong stock market retreated for 2 days and then made another strong move. The Hang Seng Index (HSI) and the Hang Seng Technology Index closed up 1.22% and 1.95% respectively. This was mainly because after Hangzhou, Xi\’an also announced a comprehensive cancellation today. Housing purchase restrictions continue to provide stimulus to China\’s housing market. Some point out that European and American foreign capital is returning from the Japanese stock market to the undervalued Chinese stock market. However, others believe that the signs of overheating in the Chinese stock market are increasing.
\”Nikkei\” reported that funds are returning to the Chinese stock market and the Hong Kong stock market. Compared with the end of last year, the Hong Kong stock market has approached the U.S. stock market. The Hang Seng Index rose 7.4%. The Shanghai Composite Index (SSEC) rose 5.2%. The S&P 500 Index rose 8.8% as of Tuesday (7th). % Hong Kong stocks once rose more than U.S. stocks.
In addition, the Chinese government also urges listed companies to take measures such as increasing dividends and capital flows into high-dividend stocks.
A better-than-expected improvement in economic indicators also provided an opportunity to turn upward.
China\’s GDP growth in the first quarter of this year was 5.3%, far exceeding the 4.5% average of the Nikkei and Nikkei QUICK News surveys. Last month, the manufacturing purchasing managers\’ index (PMI) was 50.4 for two consecutive months, exceeding 50. The boom and bust of the economy dividing line.
As of Tuesday, the Citi Economic Surprise Index, which indexes the deviation of actual economic indicators from expectations, was at 14.8 and continued to hover in the positive range.
Among the listed companies in mainland China and Hong Kong with a market value of more than 300 billion yuan, those with the largest increase compared with the rise and fall of their stock prices at the end of last year were Foxconn Industrial Internet and China National Offshore Oil Corporation, both owned by Taiwanese electronics manufacturer Hon Hai, which rose 65% and 53% respectively.
Among the top gainers, China\’s state-owned oil companies PetroChina, China Merchants Bank and China CITIC Bank also performed very well in terms of high dividends.
China\’s State Council last month released a revised version of its first capital market stimulus measures in nearly 10 years. In order to improve the quality of listed companies, it proposed measures such as increasing dividend ratios and paying dividends multiple times a year. It hopes to cultivate stock investment as a pillar of national assets to replace real estate.
The relative undervaluation of Chinese stocks in terms of stock price metrics such as dividend yields is strengthening as global stock markets rise.
The bullish attitude of U.S. and European brokerages towards Chinese and Hong Kong stocks is increasing. UBS Group upgraded its investment rating on China and Hong Kong stocks late last month. Strategist Sunil Tirumalai said that China is starting to show signs of consumption recovery, which may boost the market.\”
Kinger Lau, chief China equity strategist at Goldman Sachs, pointed out that if the China Securities Regulatory Commission’s policies improve the quality of listed companies or strengthen investor protection, Chinese stock valuations may rise by 40%.
Wu Lixian, a strategist at Everbright Securities International, said that overseas funds that originally flowed to Japan and India are constantly returning to the Chinese stock market. Economist Tsukioka Naoki, director of research and technology at Mizuho, ​​also pointed out that overseas investors, including Europe and the United States, may be diverting funds from the sluggish Japanese stock market. Moving back to the undervalued Chinese stock market.
However, Morgan Stanley strategist Laura Wang believes that although the continued capital outflows from China and Hong Kong have finally ended, the current upward momentum may weaken China\’s consumption and housing market recovery, which will take time to bring about deflation and put pressure on corporate profits.

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