Strong Hong Kong dollar, strong Hong Kong stock? Institutions remind that market volatility will intensify after May

category:Finance
 Strong Hong Kong dollar, strong Hong Kong stock? Institutions remind that market volatility will intensify after May


Chen Huiren, founder and chief investment officer of Hong Kong Dazheng capital, said that the current dividend rate of Hang Seng index is about 3.9%, which is not considerable, but it is a veritable oasis in the current zero interest rate desert. By contrast, the S & P 500 has a dividend yield of 2.2%. In addition, the current market to net ratio of the Hang Seng index is about 1 times, close to the lowest level in the past 20 years. However, from the perspective of P / E ratio, the expected P / E ratio of the index is about 10.7 times. If the global market faces another round of decline, the index is likely to fall by 10%, test the recent low again, in the worst case, it may fall by more than 20%, test the 20-year low, and the P / E ratio will drop to 8 times.

Usually, when the stock market is weak, the Hong Kong dollar is also weak. On the contrary, the strong Hong Kong dollar tends to lead to the rise of the Hang Seng Index, which may indicate that the stock market will usher in a potential rally. This is not a law, but it seems to be a precondition. He said.

In this regard, Zhao Wenli said that this conclusion cannot be reached simply. If the Hong Kong dollars strength is mainly affected by carry trade, it is likely to stay in the Hong Kong banking system rather than necessarily enter the stock market. For example, in September 2015, the Hong Kong dollar repeatedly touched the strong sides exchange guarantee, but during that period, Hong Kong stocks were generally in a downward trend; after the exchange rate reform on August 11, 2015, the expectation of RMB devaluation strengthened, resulting in a sudden increase in the demand for Hong Kong dollars and dollars, but the devaluation of RMB put pressure on the profitability of Chinese enterprises, while the downward pressure on Hong Kong stocks increased.

In fact, the bottom recovery of Hong Kong stocks in recent two months is mainly due to the large amount of southbound funds and the short covering of global after-sales. At that time, the undervalued value of Hong Kong stock relative to A-share was the main reason, that is, the A / H share premium was the main reason for the large amount of capital in the south. The Hang Seng A / h premium index soared from nearly 110 at the beginning of the year to a peak of 135 in March and has remained around 130 ever since.

Market volatility will intensify after May

For now, investors again face the question of whether to sell in May.. In the highly uncertain global outlook for 2020, this dilemma may be more difficult than ever.

Zhao Wenli told reporters that the strategy of selling in May needs to be examined from two perspectives, one is to observe the historical performance from November to April and may to October, the other is only to observe may. Over the past 10 years, the may sell strategy has been largely profitable. Since 2010, selling in May and buying back in November can avoid a sharp decline in the past five years. In May alone, the Hang Seng Index has fallen for eight of the last 10 years on record. Recent trends may indicate that the may sell strategy is robust.

But in the long run, the may sell strategy is not necessarily profitable. In 17 of the past 40 years, may October has actually performed better than November April. Therefore, although the may throw out strategy may have made considerable achievements in recent years, it is not an effective defense strategy historically.

This year, especially in the context of large market rebound and high uncertainty, the strategy of may sell may be effective again. Even if economies may begin to loosen restrictions on social distance, the consequences of the epidemic are far from clear. From May to July, the market may face more challenges. According to Zhao Wenli, most Hong Kong stock companies will release mid-term results from July, which will better quantify the impact of the epidemic and may trigger another wave of earnings forecast reduction. He suggested increasing holdings in sectors that could benefit from mainland demand, which could benefit from a relatively early restart of the Chinese economy. Source: editor in charge of the first financial daily: Guo Chenqi, nbj9931

This year, especially in the context of large market rebound and high uncertainty, the strategy of may sell may be effective again. Even if economies may begin to loosen restrictions on social distance, the consequences of the epidemic are far from clear.

From May to July, the market may face more challenges. According to Zhao Wenli, most Hong Kong stock companies will release mid-term results from July, which will better quantify the impact of the epidemic and may trigger another wave of earnings forecast reduction. He suggested increasing holdings in sectors that could benefit from mainland demand, which could benefit from a relatively early restart of the Chinese economy.