Caifinance News on September 24th (Editor: Hu Jiarong) Benefiting from the release of a series of heavyweight policies in the morning session, the three major indexes of the Hong Kong stock market all strengthened. As of the close, the Hang Seng Index rose by 4.13% to close at 19000.56 points; the technology index rose by 5.88% to close at 3915.58 points; the state-owned enterprise index rose by 5.09% to close at 6714.47 points.

First, let's take a look at the main reasons for the significant rise of the three major indexes of the Hong Kong stock market. Today in the morning session, multiple heavyweight policies were announced, such as reducing the reserve requirement ratio and policy interest rates; lowering the interest rates on existing housing loans and unifying the minimum down payment ratio for home loans; introducing new policy tools to support stock market development.

Boosted by the above news, the Hang Seng Index, Hang Seng Tech Index, and state-owned enterprise index all rose by more than 4%.

Note: Performance of the Hang Seng Index since March 1, 2023

The Hang Seng Index has even achieved a 'ten consecutive gains', successfully surpassing the important psychological level of 19000 points. In addition, the index's gain today is also the largest single-day increase since March 1, 2023.

How do institutions view the significant rise in the Hong Kong stock market today?

Yan Zhaojun, a strategist analyst at Zhongtai International, stated that the forecasted PE ratio of the Hang Seng Index is still at historically low levels. The risk premium of the Hang Seng Index is at one standard deviation above the rolling two-year average. The valuations of Hong Kong stocks compared to overseas stock markets are at historically low levels. Assuming unchanged profit forecasts, with the U.S. 10-year Treasury yield at 3.8% and a risk premium of 6.3% (the level in mid-April this year), the Hang Seng Index is expected to rise to 20,700 points. The sustained upward trend of Hong Kong stocks in the future still requires a significant increase in growth policies or continued strengthening of fundamental data. Otherwise, Hong Kong stocks may only experience a brief rally driven by funds as was seen from the end of April to mid-May this year.

Huang Lichong, President of Huisheng International Capital, stated that the latest policies are a step to alleviate the financial situation and support the economy. The effectiveness of these measures will depend on their implementation and the overall economic environment in which they are situated.

Today's Market

In terms of individual stock performance, banks, insurance, autos, real estate, and auto retail stocks are among the top gainers.

Multiple bullish factors boost the financial sector, with CM Bank rising by almost 11%.

Among bank stocks, CM Bank (03968.HK), Bank of Communications (03328.HK), and Industrial and Commercial Bank of China (01398.HK) rose by 10.82%, 6.35%, and 5.86% respectively.

Note: Performance of bank stocks.

In terms of news, the State Council Information Office held a press conference in the morning, where the central bank announced plans for a combination of measures, including lowering the reserve requirement ratio, creating new monetary policy tools to support stable development of the stock market, and more.

These policies have boosted the performance of insurance and securities stocks. By the close of trading, China Pacific Insurance (02601.HK), New China Life Insurance (01336.HK), and Ping An Insurance (02318.HK) rose by 12.47%, 8.34%, and 7.17% respectively.

Note: Performance of insurance stocks.

At the close, china international capital corporation (03908.HK), citic securities (06030.HK), and htsc (06886.HK) rose by 11.19%, 10.41%, and 9.57% respectively.

Note: The performance of securities stocks.

Lowering the interest rates on existing home loans stimulates real estate stocks, with r&f properties rising by 16%.

Among real estate stocks, r&f properties (02777.HK), shimao group (00813.HK), and cifi hold gp (00884.HK) rose by 16%, 15.09%, and 14.04% respectively.

Note: performance of real estate stocks.

On the news side, at today's State Council Information Office press conference, Pan Gongsheng, Governor of the People's Bank of China, stated that commercial banks will be guided to lower the interest rates on existing home loans to around the interest rates for new home loans, with an average expected decrease of about 0.5 percentage points. The minimum down payment ratio for first-time and second-time home loans will be unified, and the minimum down payment ratio for second-time home loans at the national level will be reduced from 25% to 15%.

Most automotive retail stocks are strong, with meidong auto rising by nearly 18%.

In the automotive retail sector, Meidong Auto (01268.HK), Zhongsheng Hldg (00881.HK), Tuhu W (09690.HK) rose by 17.68%, 9.85%, 6.42% respectively.

Note: Performance of automotive retail stocks

On the news front, according to relevant data from the China Automobile Dealers Association, in August, the overall discount rate of the new car market was 17.4%, and from January to August this year, the 'price war' has led to an overall retail cumulative loss of 138 billion yuan in the new car market, significantly impacting the healthy development of the industry. The association calls on relevant government departments to pay close attention to the funding difficulties and closure risks faced by the current automobile distribution sector, decisively take phased financial relief policy measures, and effectively prevent the systemic risks in the automotive distribution sector.

Sinolink Securities pointed out that in September, various provinces have successively issued replacement policies in response to the introduction of the national scrap renewal policy, encouraging consumers to trade in old cars for new ones, effectively boosting new car sales.

Southbound funds.

Today, the Southbound funds saw a net outflow amounting to 4.308 billion Hong Kong dollars. Since the beginning of this year, the cumulative inflow has been nearly 461.1 billion Hong Kong dollars.

Note: The performance of southbound funds since the beginning of this year.

Individual stocks are fluctuating.

Miniso's stock price fell by more than 20%, planning to invest 6.3 billion in Yonghui Superstores.

Miniso (09896.HK) fell by 23.86%, closing at 25.05 Hong Kong dollars. In terms of news, the company announced that it plans to acquire 29.4% of Yonghui Supermarkets for about 6.3 billion RMB. UBS issued a report, expecting the investment in Yonghui Supermarket to have a short-term negative impact on Miniso's stock price, as Yonghui Supermarket has high profit volatility in the short term, low visibility of turning losses into profits, and investor concerns about Miniso's non-core business investments and cash utilization.

Heytea's stock rose by nearly 12%, institutions stated that its franchise and overseas business are steadily progressing.

Heytea (02150.HK) rose by 11.94%, closing at 1.50 Hong Kong dollars. Guosen Securities' research report pointed out that the company will continue to focus on further expanding stores in existing first-tier, new first-tier, and key second-tier cities to increase market penetration. In the current consumption environment, the company's revenue is under pressure, it has slowed down the pace of opening directly operated stores, strengthened marketing efforts, steadily expanded its franchise and overseas incremental business. They have given a “shareholding” rating.