y8poker| Can the Hang Seng Index continue to shrink and correct the "capital market" of Hong Kong stocks continue?

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this article is fromy8poker: Financial Union Feng Yi

Financial Union, May 26 (Editor Feng Yi) Recently, the Hang Seng Index market has experienced continuous adjustments. Coupled with the pressure on the Federal Reserve's interest rate cut expectations, the market's concerns about the funding of Hong Kong stocks have been triggered again.

Since the launch of the market on January 23, the Hong Kong stock market has performed strongly. As of May 20, the Hang Seng Index, Hang Seng Technology Index, and Hang Seng China Enterprise Index have all increased by more than 30%. But before this, many institutions believed that the current round of Hong Kong stocks was mainly trading funds.

On the whole, liquidity has always been an important factor affecting the performance of the Hong Kong stock market. Especially since the beginning of the year, macro fundamental fluctuations have not been significant, and the influence of liquidity on the market has continued to strengthen.

With the recent continuous correction of the Hang Seng Index, the market's money-making effect has declined. The daily turnover of Hong Kong stocks also shrank significantly. As of May 20, the average daily turnover of the Hang Seng Index for the week was approximately HK$138.1 billion, down nearly 20% from the previous week's average daily turnover of HK$168.6 billion.y8pokerThe market is worried about the short-term ebb in funds.

However, Huafu Securities analysts Yan Xiang and Zhu Chengcheng pointed out in their report on May 21 that judging from recent trend changes, there are signs of marginal improvement in the funds of various institutions.

Among them, the most noteworthy thing is that since the end of April, not only Hong Kong Stock Connect funds have continued to flow in. Although funds from international intermediaries still have a net outflow throughout the year, they have begun to gradually flow back on the margins. In addition, the outflow of funds from local intermediaries in Hong Kong has also slowed down.

On the other hand, although the cumulative net inflow of funds to the Hong Kong Stock Connect to the South has exceeded HK$200 billion since the beginning of this year.

However, in terms of absolute market value, the current Hong Kong stock market is basically in a three-pronged situation of foreign investment, Hong Kong capital and domestic shareholding, and the influence of international institutions and local Hong Kong institutions is still considerable.

As of May 20, the market value of international intermediary holdings in the Hong Kong stock market was 8.y8poker.5 trillion Hong Kong dollars, accounting for 38%. The market value of local intermediaries in Hong Kong is HK$8.0 trillion, accounting for 36%. The market value of Hong Kong Stock Connect is HK$2.9 trillion, accounting for 13%.

Therefore, whether subsequent southward funds can maintain the intensity of net inflows and whether net inflows of foreign capital continue to improve are the keys to determining the short-term funding of Hong Kong stocks.

Interestingly, according to a recent report by Huatai Securities's strategy team, the net inflow of allocated foreign investment based on EPFR last week turned positive for the first time since the end of March, with a net inflow of US$86 million, of which passive foreign investment was the main driving force, with a net inflow of US$202 million.

Huatai Securities said that against the background of domestic policy catalysis and improving overseas liquidity, capital may be the main driver of this round of rebound in Hong Kong stocks. Domestic and foreign capital have joined forces to build an incremental environment for Hong Kong stocks 'funds, and the liquidation of short selling funds has also contributed to the main increase.

Looking forward, Huatai Securities believes that the allocation space for Hong Kong stocks is expected to continue. The timing lies at the intersection of key domestic and overseas policies in the first and mid-June, and the space may be in line with the high level at the end of July last year. Market data shows that the Hang Seng Index hit a peak of 20,361.03 points in July last year.