Hong Kong Stock Market Review: Continues to Surge

Although the situation in the Middle East escalated overnight, Chinese assets continued to soar without the southbound funds. Hong Kong stocks also rose smoothly, once again showing a general increase. Despite the fact that the relaxation measures in the core regions of the country are not as expected, it does not hinder more expectations. The real estate market continues to surge, and leading securities firms are no exception.

Undoubtedly, this kind of surge is unhealthy, and there are still uncertainties in the overseas macro environment. For example, global brands like Nike and Stellantis have just given pessimistic outlooks, and American port workers are about to go on strike, hindering the decline in inflation.

Of course, blue-chip stocks did not fall behind in terms of trading volume and gains today, which can hardly be considered unreasonable. However, the market still needs a healthy adjustment to provide more opportunities for long-term funds to increase their allocations, in order to prevent sharp rises and falls in the market.

In addition, BYD issued its first recall of electric vehicles, but the company also set a record in sales in September. The overall sales data for electric vehicles in September exceeded expectations. With the arrival of the peak season for car sales in Q4, it is also expected that stimulus policies will be introduced. In addition, with Tesla's upcoming Robotaxi event, it may also record the first quarterly sales growth this year, making the entire sector likely to remain one of the focal points of the market.

The recent rebound in BYD's stock price is much lower than that of other new forces. Although its profit elasticity may not be as high as theirs, its certainty is much greater. If foreign capital truly returns this time, it is unknown whether it can become an important driver for the company's valuation increase. As mentioned earlier, just like Pinduoduo, geopolitical factors remain the biggest downward pressure.

Goldman Sachs pointed out in its latest research report that the combined market value of China's three e-commerce giants is only one-fourth of Amazon's, and the valuations of e-commerce companies such as Alibaba, Pinduoduo, and JD.com are still maintained at 9-12 times, lower than the median of 14.3 times for the Chinese internet industry, indicating a huge potential for revaluation.

Furthermore, according to reports, S3 Partners' latest report indicates that the approximately $3.7 billion in profits from shorting Chinese concept stocks this year has completely evaporated, with current unrealized losses of about $3.2 billion. The stocks that suffered the greatest losses from short selling are Alibaba, JD.com, Nio, Li Auto, XPeng, and Pinduoduo. It seems that there is still an opportunity for the market to continue to squeeze the shorts.

The market is still scrambling for positions today, but it can be seen that the momentum of some large-cap stocks in Hong Kong has eased, with funds flowing into other second and third-line stocks under the guise of making up for the rise. A-shares with daily limit-ups are particularly prominent. If you can't get in on the action, buy something else. In the short term, there is no need to consider much in a bull market, the most important thing is to have a position.

The current surge reflects everyone's anticipation of easing, similar to the situation in the U.S. stock market four years ago. The fundamentals have not changed, but with more liquidity, the stock market will continue to rise. Recently, domestic policies have been introduced rapidly, and fiscal measures will definitely follow suit. It is just doubtful whether the intensity can support a comprehensive recovery of the stock market.

Especially in Hong Kong, stocks that usually have low trading volumes suddenly surged in the past few days. If the market sentiment cools down later, it is highly likely that they will not be able to escape. If the bull market can continue for a long time, the performance of core assets will still be superior.

Hong Kong stocks will reopen on Wednesday. Although there are no southbound funds, it is highly likely that there will not be a major adjustment. Mainly because everyone currently believes that the mainland's attitude has changed, and they will not easily abandon their chips before more positive news emerges. However, it is also important to remember the crazy bull market in 2015, where ultimately not many people were able to exit successfully In the bullish market atmosphere, new stocks are the most easily speculated. Today, A-shares saw Changlian Technology, which rose 17 times, and Carote in the Hong Kong stock market, which doubled in the dark pool.

Carote is essentially a cross-border e-commerce company, with over 80% of its revenue coming from kitchenware. In recent years, the company has entered major sales channels in the United States, with revenue consistently experiencing high growth, making it one of the fastest-growing kitchenware brands globally. Currently, the United States accounts for approximately 65% of total revenue, China 20%, and Western Europe/Japan/Southeast Asia each around 5-7%. Growth is seen in all regions except China, making it a pure concept stock for going global.

The company's revenue and profit in Q1 this year grew by over 70%, on an annualized basis, originally corresponding to an IPO price of less than 8 times PE, in line with Vesync, which sells small home appliances. However, since the second half of the year, most Hong Kong IPOs have experienced significant declines on the first day. Hopefully, Carote can reignite the IPO atmosphere this time