The Zhitong Finance App learned that Huachuang Securities released a research report saying that Hong Kong stocks still have a valuation advantage over A-shares; Trump's victory and the implementation of the domestic People's Congress 10 trillion fiscal plan mark the moment when the market may start a risk on, and the liquidity environment is expected to improve further in the next 3-6 months. In terms of transaction popularity, the overall turnover and turnover rate of Hong Kong stocks continued to decline after the Hang Seng Index peaked on 10/7; as of 11/11, the average daily turnover of the Hang Seng Index for the past four weeks was $185.1 billion, at the 96% level in the past 10 years; the average daily turnover rate of the Hang Seng Index for the past four weeks was 0.35%, which is at the 95% level for the past 10 years.

The main views of Huacheng Securities are as follows:

1. Hong Kong stocks still have a valuation advantage. With an improved liquidity environment, the market may start a risk-on moment

Hong Kong stocks still have a valuation advantage, and the liquidity environment is expected to improve further in the next 3-6 months. From a valuation perspective, the current overall price-earnings ratio, absolute price-earnings ratio, and quantile of the Hong Kong stock market are lower than A-shares as a whole, and the valuation advantage of Hong Kong stocks is still obvious. As of 24/11/11, the price-earnings ratio of the Hang Seng Index was 9.5 times (37% since 2010), and the Shanghai Composite Index was 14.8 times (70% since 2010).

At the same time, as mentioned by the bank, Trump's victory and the implementation of the 10 trillions fiscal plan of the National People's Congress mark the moment when the market may start at risk. Similar to the 16th and 20th US elections, risky assets began an upward trend while steady assets faced a pullback. Until Trump's New Deal is implemented, investors are afraid to bet too much that economic fundamentals will continue to rise effectively over the next year, and that the period may experience more twists and turns. While EPS pricing remains weak during this process, the market may show more of the impact of remaining liquidity expansion on valuation. On the domestic side, 11/8 people usually announced the implementation of the 10 billion fiscal plan. As far as the capital market is concerned, it is expected that the policy may still increase at any time before next year's two meetings. There is almost no risk of clear verification of falsification. The probability of upward risk appetite is expected to be significantly greater than the downside, and the logic of remaining liquidity expansion may continue further.

2. Profit forecasts for most Hong Kong stock industries have been revised downgraded in the past month

Profit forecasts for most Hong Kong stock industries have been revised downgraded in the past month; only the financial sector has been revised up. As of 24/10/31, the overall EPS growth rate of Hong Kong stocks in 2024 (Bloomberg's unanimous expectations) was slightly revised in the past month. Among them, the Hang Seng Index was revised by 0.4 pct, Hang Seng China Enterprise Index was revised by 0.3 pcts, and the Hang Seng Composite Index was revised down by 0.5 pct; profit forecasts for most industries in the Hang Seng Industry Index were revised down, with only the financial sector being revised by 2.3 pcts; the real estate and construction industry downgraded 17.7 pcts and the healthcare industry downgraded 5.4 pcts, which is a significant reduction ratio.

3. The overall decline in Hong Kong stocks, and the popularity of transactions declined

Hong Kong stocks have declined overall in the past month, and the industry has bucked the trend. As of 24/11/11, Hong Kong stocks have declined overall in the past month. Among the main indices, the Hang Seng Index fell 3.9%, Hang Seng Technology fell 1.8%, and the Hang Seng State-owned Enterprises Index fell 3.5%. Stylistically, the Hang Seng Large Cap Index fell 3.7%, the Hang Seng Mid Cap Index fell 1.6%, and the Hang Seng Small Cap Index rose 1%. The small-cap style clearly prevailed. In terms of industry, only the industry rose (up and down 0.5% in the past month, same below); the energy industry (-10.8%), healthcare (-7.8%), and telecommunications (-5.6%) declined significantly.

Net capital inflows to the south exceeded HK$80 billion in October. As of October 31, net capital inflows to the south for the first 10 months of this year reached HK$583.4 billion, and net capital inflows to the south reached HK$83.8 billion in October. Recently, it has mainly gone to commercial and retail sectors, electronics, banking, pharmaceuticals, etc., and the inflow rate has accelerated markedly. Among the top 10 net purchases/sales of Southbound Capital in October, Alibaba-W (net purchase of HK$25.9 billion, same below), Xiaomi Group -W (HK$5.9 billion), and SMIC (HK$5.7 billion) ranked in the top three net purchases; Meituan-W (net sales of HK$11.2 billion, same below), Hong Kong Stock Exchange (HK$3.1 billion), and CNOOC (HK$2.7 billion) ranked in the top three net sales.

The Hang Seng Index's turnover and turnover rate declined. In terms of transaction popularity, the overall turnover and turnover rate of Hong Kong stocks continued to decline after the Hang Seng Index peaked on 10/7; as of 11/11, the average daily turnover of the Hang Seng Index for the past four weeks was $185.1 billion, at the 96% level in the past 10 years; the average daily turnover rate of the Hang Seng Index for the past four weeks was 0.35%, which is at the 95% level for the past 10 years.

IV. Hong Kong Stock Gold Stock Portfolio

Huachuang Strategy collaborated with the industry to screen Hong Kong's gold stock portfolio for November. Based on recommendations from Huachuang industry analysts, the November Hong Kong stock portfolio was formed, including Tencent Holdings (00700), Mingchuang Premium (09896), Bubble Mart (09992), and BYD Electronics (00285).

Risk warning:

1. Macroeconomic recovery falls short of expectations;

2. Weak overseas economies may have an impact on related industrial chains and domestic exports;

3. Historical experience does not represent the future: due to changes in the market environment and other factors, the experience derived from historical data may not work in the future.