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Hang Seng Index opened lower and turned lower

April 18, 2018 10:40
source: Oriental Wealth Network

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Summary
[The HSI opened higher and lower; The central bank lowered its prospects to increase confidence. Hong Kong stocks valuation recovery continued. The agency said that the central bank's RRR cut will boost market confidence, improve the market's pessimistic expectations, and increase market liquidity. The process of restoring the valuation of Hong Kong stocks will continue.

K diagram hsi_61

On Wednesday (April 18), US stocks closed higher on Tuesday for the second consecutive trading day, led by the technology and consumer sectors. The Dow rose more than 210 points for the second consecutive day. Goldman Sachs, Netflix and other financial reports were strong, and economic data was robust, boosting market confidence. At the opening bell today, the Hang Seng Index of Hong Kong stocks opened 1.35% higher, and then the volatility was lower. As of the press release, the Hang Seng Index dropped 0.22% to 2,9997.9 points.

In terms of information, the People's Bank of China decided to, starting from April 25, 2018, cut down on large-scale commercial banks, joint-stock commercial banks, city commercial banks, non-county rural commercial banks, and foreign banks.Deposit reserveThe rate is 1 percentage point; on the same day, the above banks will each use the funds released by the RRR reduction to repay the medium-term borrowing facilities (MLF) they have borrowed from the central bank in the order of “first borrow first, return first”.

As for the trend of the HSI futures market, the agency said that the central bank's RRR cut will increase market confidence, improve the market's pessimistic expectations, and increase market liquidity. The process of restoring the valuation of Hong Kong stocks will continue.

  Institutional perspective

Yang Delong, managing director and chief economist of Qianhai Open Source Fund believes that under the current background of Sino-U.S. trade friction, the RRR cut will increase long-term capital supply, and the bank’s capital cost will be reduced. The replacement of MLF will make the cost of commercial bank interest payments somewhat lower. The reduction will help reduce the cost of corporate financing, which will greatly boost investor confidence.

Guotai Junanmarketing strategyCheng Jiawei said that the action of the PBOC to lower the standard is not sudden. It is believed that it will help ease the impact of leverage on the financial system and the economy, and at the same time it will help improve the market sentiment. However, due to the uncertainties that plagued the market, there will be more restrictions on Hong Kong stocks. With the increase, HSI is expected to fluctuate between 29,500 and 31,000.

Southwest Securities said that the current RRR cut is the first time the central bank lowered the benchmark in two years. The current RRR cut will release 400 billion yuan of liquidity to the economy. The RRR cut reflects the firm determination of the central bank to maintain the real economy and the stability of the financial market, in the RMB exchange rate. In a strong state, the impact of the RRR cut on the exchange rate will be reduced, and the domestic economic growth will have a slowing trend. The reduction will help maintain the stable operation of the economy. At the same time, this reduction will increase market confidence and increase market liquidity, which is conducive to the growth of the industry.

Yao Yao Securities Yi Yaohui said that Hong Kong stocks once again turned bad yesterday, the market is still worriedCash flowAs for the situation and the latest impact of Sino-U.S. trade, only one day has not been finalized. I am afraid Hong Kong stocks will still fluctuate considerably. However, an indisputable fact is that the trend of the Hang Seng Index and even the investment climate have all worsened. Of course, there are still many news about the market. Since US stocks made a good job overnight and the People's Bank of China announced the release of the news, it is expected to bring support to Hong Kong stocks and see whether they can maintain the key level of 30,000 points today.

Guiren Capital stated that Hong Kong stocks opened slightly higher in the morning due to external influence. Hong Kong stocks plunged and Hong Kong stocks dragged Hong Kong's shares up and turned green. In addition, US trade sanctions against China's ZTE and other companies caused market turmoil, risk aversion climbed, and funds left the market. At the end of the HSI, the loss increased. Although external US stocks closed up again, the international situation is tense. The Sino-US trade war has escalated pressure on the stability of Hong Kong stocks, and A shares have repeatedly dropped and dragged Hong Kong stocks back. However, the Chinese central bank’s directional RRR cut may inject confidence into the tight market. , Hong Kong stocks recently traction with A shares, can pay attention to the Bank of China.

Tianfeng Securities believes that with the gradual restoration of the employment cycle, Hong Kong stocks will achieve a step-by-step upward trend, and their upward cycle will generally lag behind and approach the pace of the employment cycle. We believe that the role of the employment cycle for Hong Kong stocks will be realized one by one from the weights sector. We divide the conduction path into two major segments, the contribution of industrial investment and industrial production to banks and energy, and the increased contribution of labor to the marginal contribution of insurance.

And Poly Investment said that although Hong Kong stocks rose about 30% last year, the larger increase, but this is based on the low of 2016, the current valuation of Hong Kong stocks compared with US stocks is still a far cry from. The U.S. stocks have gone through a nine-year bull market, but the Hong Kong stocks performed better last year, and they have performed in the previous year. Hong Kong stocks have more room to rise than US stocks. And Poly Investment further stated that Hong Kong stocks are now very low, both in terms of absolute valuations and relative valuations in various markets. With the further influx of Mainland funds into Hong Kong stocks, the process of restoring the valuation of Hong Kong stocks will continue.

  Sealand Franklin FundXu Cheng, the manager, said that compared to last year, the Hong Kong stock market has undergone three distinct changes. First, market volatility has increased significantly; second, with the continuous inflow of funds from the Mainland, the discourse power of South-South funds will increase. Third, a series of policies such as tax cuts and support for high-tech industries that will be introduced in succession will increase investment. The confidence of the market in both places is expected to benefit the overall market trend. There are no major adjustments in investment strategy, but only more attention will be paid to the changes in macroeconomic fundamentals and the selection of individual stocks will also be strengthened.

Analysis and interpretation>>

  List of the stock market after the central bank lowered the calendar

  Li Dazhao: RRR cut has a very positive effect on stabilizing economic growth and the stock market

  Guo Jin Li Lifeng: Monetary policy shifted from neutral to moderately expanding domestic demand

  Ping Ming Chief Economist Zhang Ming: Lowering Quota Helps Stabilize Stock Market and Macroeconomics

  Yiju Research Institute: Reduced Allowance Helps for a More Loose Home Loan Environment

  Huachuang Strategy Commentary Central Bank Cuts Sharply: Monetary Policy Open Space Opens

  Yang Delong: The current central bank cuts the standard is timely rain boosts market confidence significantly

  Soochow Strategy Quick Evaluation and Reduction: Logic for Growth Shares Further Strengthened


                (Editor: DF064)

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