To The Moon

The $HSI(HSI)$ rose by a cumulative 26.62% in November, once setting a record for the largest single-month gain in nearly 10 years. Since the end of October, the Hang Seng Index has accumulated a rise of 31.32%, the Hang Seng Technology Index accumulated a rise of 50.14%.

Hong Kong stocks are still in the bottom rebound stage, the latest index only repaired to September level and the $HSTECH(HSTECH)$ still fell 16.58% and 25.26% respectively during the year.

Hang Seng Tech Index rebounded over 50%

On December 5, almost all sectors in Hong Kong stocks closed higher, led by the healthcare sector, up 9.62%, with the retail sector and the technology hardware and equipment sector leading the way.

Tech stocks rose sharply, with $Bilibili Inc.(BILI)$ up 28.84%, $XIAOMI-W(01810)$ up 13.64%, $BIDU-SW(09888)$ up 11.12%, $Alibaba(09988)$ up 9.26%, and $Meituan(03690)$ up 3.75%. $TENCENT(00700)$ rose 6.08% and its share price reached HK$300 per share, a new high in the past 3 months.

Foreign investors keep adding Chinese assets

Hong Kong stocks continued to surge, and foreign institutional funds also provided a steady financial support for the Hong Kong stock market.

Foreign institutions accelerated their layout, and top global giants such as BlackRock, Goldman Sachs and JPMorgan Chase began to go long on Hong Kong stocks.

According to the latest documents disclosed by the Hong Kong Stock Exchange,

On Nov. 30, BlackRock bought 2,908,200 H shares of $ZTE(00763)$ at an average price of HK$16.7002 per share, increasing its shareholding from 9.77% to 10.15%.

On Nov. 30, Goldman Sachs bought 627,000 H shares of $CANSINOBIO(06185)$ at an average price of HK$99.4869 per share, increasing its shareholding from 4.63% to 5.11%.

On November 29, JP Morgan bought 20.723 million H shares of $Meituan(03690)$ at an average price of HK$149.1982 per share, increasing its shareholding from 4.67% to 5.04%.

On November 28, JP Morgan Chase increased its holding of $GALAXY ENT(00027)$ by 1999.6541 million shares at HK$42.6809 per share, for a total amount of about HK$853 million. The latest number of shares held after the increase is about 264 million shares, and the latest shareholding ratio is 6.05%.

Morgan Stanley turns to long China stock market

On Dec. 4, Morgan Stanley was bullish on China stocks again after nearly two years.

1) Upgraded its rating to Overweight

Morgan Stanley raised its rating on China stocks to 'Overweight' from 'Recommendation' and raised its target on the Hang Seng Index to 21,200 points from 18,200 points. The new target price would imply an upside of more than 8%.

Morgan Stanley attributed the rating upgrade to a number of positive developments and a clear path to re-opening.

2) Recommends these sectors

Morgan Stanley recommends an increased allocation to consumer goods companies and post-pandemic sectors, as well as an increased allocation to offshore China equities.

Given the consensus expectation of earnings growth and expanding P/E ratios for Asian emerging market stocks, Morgan Stanley even believes: "A new bull cycle is beginning.

What is the valuation of Hong Kong stocks?

Analysts said the current valuation level of Hong Kong stocks is low, with the Hang Seng Index forward a P/E ratio of 8.2 x, well below the historical average of 12.4.

Looking ahead to 2023, the relative advantage of China's economy growth potential over overseas is expected to come to the fore, driving up the performance valuation of Hong Kong stocks.

Analysts say Internet companies are ushering in a new spring as core assets in China.

In the short term, Q4 is expected to be the bottom of the performance, and Q1-Q2 in 2023 will continue to pick up, after which it will really enter the recovery.

Risk

Hong Kong stocks are still in a bear market, the current rebound belongs to the valuation repair stage under the expectation of speculation, and we still need to wait for more positive indicators to appear in the long term.