From negative 6.1% to negative 1.47%: The Hang Seng's Stunning Recovery Sparks Investor FOMO!
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From negative 6.1% to negative 1.47%: The Hang Seng's Stunning Recovery Sparks Investor FOMO!
The Hang Seng Index has seen a remarkable recovery, bouncing back from a low of negative 6.1% to just negative 1.47%, as bargain hunters quickly moved to snap up undervalued shares. Meituan-W came under pressure with the broader market but successfully rebounded after bottoming out at $189. It closed at all time closing high of $205, registering a 3.95% gain or HK$7.80 surge from its lowest point.
Daiwa's latest report underscores a strong rally in Chinese internet stocks, with gains between 30% and 50% following the announcement of recent stimulus measures. According to discussions with institutional investors, Daiwa believes this momentum is far from over, driven largely by Fear of Missing Out (FOMO) trades and widespread repositioning to reduce underweight holdings in Chinese equities. While many are calling for more concrete policy support to maintain a long-term market recovery, Daiwa predicts that such support could take several months, but investors are acting swiftly to capitalize on current opportunities.
The firm also highlights a growing shift among global investors who are moving away from underweight positions in China, with internet stocks being a key focus. Squeezed value stocks have now rebounded to their three-year averages, indicating that the trend of underweighting Chinese equities is reversing. Despite this shift, major companies like Alibaba, Tencent, JD, Baidu, and NetEase continue to trade below their five-year average price-to-earnings ratios.
While Daiwa warns that a short-term market consolidation is possible, given the quick surge in stock prices, it notes that many long-term investors are still waiting for more favorable entry points.
The firm recommends taking advantage of any market corrections to accumulate shares in Tencent, Trip.com, Meituan, Alibaba, and Pinduoduo.
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Modify on 2024-10-03 18:49
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