crashbandicoot2cortexstrikesbackps1| The Hang Seng Index continues to shrink and pull back Can the "capital market" of Hong Kong stocks continue?

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In recent days, the Hang Seng Index has ushered in a series of adjustments, superimposed pressure on Fed interest rate cut expectations, and also triggered market concerns about the capital side of Hong Kong stocks again.

Since the start of the market on January 23, the Hong Kong stock market has performed strongly, with the Hang Seng Index, the Hang Seng Technology Index and the Hang Seng China Enterprises Index all up more than 30% as of May 20. However, before that, many institutions believed that the current round of Hong Kong stocks was mainly driven by trading funds.

On the whole, liquidity has always been an important factor affecting the performance of the Hong Kong stock market, especially since the beginning of the year, the fluctuation of macro fundamentals is not significant, and the influence of liquidity on the market continues to strengthen.

With the recent continuous correction of the Hang Seng Index, the moneymaking effect of the market has declined. The daily turnover of Hong Kong stocks also shrank significantly. As of May 20, the average daily turnover of the Hang Seng Index that week was about HK $138.1 billion, down nearly 20% from the average daily turnover of HK $168.6 billion in the previous week.Crashbandicoot2cortexstrikesbackps1The market is worried about the short-term ebb of funds.

However, Huafu Securities analysts Yan Xiang, Zhu Chengcheng pointed out in the May 21 report that from the recent trend changes, all kinds of institutional funds are showing marginal improvement signals.

One of the most noteworthy is that not only the Hong Kong Stock Exchange has continued to flow in since the end of April. Although there is still a net outflow of funds from international intermediaries throughout the year, the marginal flow has gradually begun to return. In addition, the rate of capital outflow from local intermediaries in Hong Kong has also slowed down.

On the other hand, although southbound capital from Hong Kong stocks has accumulated a significant net inflow of more than HK $200 billion so far this year.

However, in terms of the proportion of absolute market capitalization, the current Hong Kong stock market is basically a tripartite situation of foreign capital, Hong Kong capital and domestic ownership, and the influence of international institutions and Hong Kong local institutions is still not small.

As of May 20, the market value of international intermediaries in the Hong Kong stock market was 8. 5%.Crashbandicoot2cortexstrikesbackps10.5 trillion Hong Kong dollars, accounting for 38%. The market value of local intermediaries in Hong Kong is HK $8 trillion, accounting for 36 per cent. The market capitalization of Hong Kong shares is HK $2.9 trillion, accounting for 13%.

Therefore, whether the subsequent southward capital inflows can maintain the intensity of net inflows and whether the net inflows of foreign capital continue to improve are the key to determining the short-term capital side of Hong Kong stocks.

Interestingly, according to a recent report by Huatai Securities Strategy team, last week's net inflow of allocation foreign capital counted in terms of EPFR became positive last week for the first time since the end of March, with a net inflow of US $86 million, of which passive foreign investment was the main driving force, with a net inflow of US $202 million.

Huatai Securities said that in the context of domestic policy catalysis and improved overseas liquidity, the capital side may be the main driver of this round of rebound in Hong Kong stocks. Domestic and foreign investors work together to build an incremental environment on the capital side of Hong Kong stocks, and the unwinding of short selling funds also contributed to the main increments.

Looking forward, Huatai Securities believes that the space for the allocation of Hong Kong stocks is expected to continue, which lies in the intersection of key nodes of policies at home and abroad in the first and middle of June, which may be on a par with the high at the end of July last year. Market data show that the Hang Seng Index hit a high of 20361.03 in July last year.