Hong Kong Stock Market Review: Becoming a Drag
Hong Kong stocks performed poorly, with the Hang Seng Index and SMIC both closing lower. The semiconductor industry is facing selling pressure, and the buyback policy may not have the expected effect. Despite poor data in September, there is hope for improvement in October. China Resources Beverage's IPO is priced at 14.5 yuan, with a valuation similar to Nongfu Spring, and stock price fluctuations may increase
The Hong Kong stock market has become a drag again, with not only the Hang Seng Index falling, but also SMIC International. This kind of ETF clustering brings continuous positive and negative feedback in the market, naturally not benefiting SMIC H shares.
Moreover, the semiconductor industry is unlikely to participate in large-scale buybacks, while also facing pressure from major funds reducing their holdings, the latter may be more of a precaution against overheating. When the reversal comes, I believe the negative feedback will also be amplified.
Currently, domestic news is mixed, especially regarding the sustainability of consumption recovery. September data was not good, but there should be a significant improvement in October. By November, regardless of the outcome of the overseas elections, China must demonstrate bigger plans for next year.
Furthermore, although the buyback policy provides positive expectations, the actual effects may fall short of expectations. On one hand, it is limited by the current loan size, and on the other hand, some companies may apply for buybacks due to other financing needs, not solely for the purpose of repurchasing stocks, leading to deviations from the original intention.
Currently, central enterprises and state-owned enterprises are the main force in active buybacks. In a bull market or without particularly large elasticity, they excel in stability. With domestic deposit interest rates falling to a new low in many years, more and more funds will seek high-dividend stocks for stable dividends.
Finally, the Hong Kong IPO market continues to heat up, with China Resources Beverage reportedly pricing its shares at a maximum of HKD 14.5 per share, which is the valuation agreed upon with Nongfu Spring. However, in terms of this valuation, Mengniu Dairy may fare better, considering the opportunity of rising raw material prices.
At the same time, China Resources Beverage will expand the proportion of its public offering to 40%, indicating that there will be significant fluctuations in the stock price