Hong Kong Stock Market Review: Consumer stocks plummet
Consumer stocks plummet while bank stocks remain stable. The trend of AH weighted stocks diverges, related to the domestic interest rate decline. Yu'e Bao's seven-day annualized yield falls below 1.5%. Goldman Sachs points out that domestic corporate free cash flow has reached a new high. The central government plans to increase the duty-free limit for visitors to Hong Kong to boost the retail industry. This year, domestic consumption has downgraded, with tourism data holding up, but the outflow of purchasing power has led to a pessimistic outlook for the overseas luxury goods market. The sharp decline in consumer stocks is mainly due to fund redemptions. Reasons such as the decline in Xiaomi car orders and the increase in Samsung storage prices are not sufficient to cause the sharp decline in consumer stocks
As the mother of all industries, banks can protect the market but not all industries. Many consumer stocks in most funds experienced a significant decline, including both export-oriented Hisense Home Appliances and domestic demand-driven Nongfu Spring.
The trend of AH index stocks deviating is somewhat absurd, to some extent related to the continuous decline in domestic interest rates. Yesterday, Yu'ebao's seven-day annualized yield fell below 1.5%. If mainland funds cannot leave and do not want to bear exchange rate risks, they can only flow into A-share high-yield sectors.
Interestingly, Goldman Sachs recently pointed out that domestic enterprises set a new record for free cash flow last year. With idle funds earning little interest in banks and financial products carrying high risks, it may be better to directly invest in high-yield stocks.
In addition, there are reports today that the central government will soon announce a sixfold increase in the duty-free allowance for mainland visitors to Hong Kong to boost the sluggish retail industry. Similar to the previous expansion of individual visit scheme, its actual impact may not be significant, mainly due to changes in consumer habits.
Domestic consumption has been downgraded this year, with many things seeing price reductions. However, tourism data remains resilient, with a slight decline in per capita consumption but overall still holding up. With the opening up, those with the means are traveling abroad, leading to some outflow of purchasing power. Therefore, luxury brands overseas are finding it difficult to be optimistic about the Chinese market this year.
In any case, the sudden sharp decline in consumer stocks is mainly due to fund redemptions. Just like Xiaomi, although there have been recent reports of a decline in Xiaomi car orders, rising prices of storage components like Samsung affecting smartphone profit margins, these reasons alone should not be enough to cause a significant drop along with other consumer stocks. It is believed that the main reason is the all-encompassing sell-off by funds, including consumer stocks like Hisense Home Appliances