Hong Kong Stock Market Review: Repurchase Intensity Weakens
The Hong Kong stock market opened high and closed low today, with a weakening of repurchase efforts and clear profit-taking behavior in the market. Goldman Sachs observed a significant increase in LO inflows, mainly concentrated in banking, mobile, liquor, and electric vehicle related stocks. Despite improving policy expectations, institutions have not made large-scale purchases, with a decrease in repurchase efforts, and Tencent, Alibaba, and Meituan have all reduced their repurchase amounts. The reduced uncertainty in economic recovery has lowered market attractiveness, increasing short-term adjustment risks
Today opened high and closed low, many chasing high are trapped, even China Mobile is almost going to close down. The stock market has been rising too sharply these past two days, with many stocks recovering the decline from August, inevitably leading to profit-taking behavior.
According to observations from Goldman Sachs yesterday, LO did not dare to buy heavily, even leaning towards selling. Domestic institutions also did not dare to buy heavily, with hedge funds mainly inclined to cover their positions. However, this morning, there was a significant increase in LO inflows, with buying activities seen in stocks related to banks/insurance, mobile phones, liquor, and electric vehicles. Hedge funds, on the other hand, are mostly reducing their positions.
Institutions are cautious about buying heavily, perhaps due to being deceived in recent years. They may react more strongly once detailed regulations are introduced or more policies targeting the real economy emerge. Nevertheless, with improved policy expectations, the bottom should also see some uplift.
With the support of buybacks, Hong Kong stocks have long outperformed A-shares. With the rate cut and positive news yesterday, this round has seen a surge in a concentrated warehouse style. As policy expectations open up, if overseas long-term funds can be attracted back, it will still rely heavily on familiar technology and internet stocks.
However, with stock prices rising rapidly, the buyback efforts of top technology and internet stocks are rapidly weakening.
For instance, Tencent has reduced its daily buyback from 1 billion RMB to 700 million RMB today; Alibaba has reduced its daily buyback from $60 million to $40 million last week, further decreasing to $20 million yesterday; Meituan has also not conducted any buybacks in the past two days.
With the economy still uncertain about recovery, the attractiveness naturally diminishes. Moreover, companies conducting selective buybacks at this time also send out negative signals, increasing the likelihood of short-term adjustments