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<Research>BOCI Sees Minimal Impact on HK Stocks from HKMA's Sale of USD for HKD; HSI Yr-End Target at 27,500
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BOCI has released a report on the Chinese market noting that liquidity in the Hong Kong stock market remains abundant, alongside a YTD rise in trading volumes. As of August 6, the average daily turnover of the Hong Kong stock market amounted to HKD243.3 billion, much higher than HKD108.5 billion in the same period last year and HKD131.8 billion for the entire year of 2024. The HSI and HSTECH also recorded spikes of 24.18% and 23.81%, respectively. In recent weeks, liquidity in the Hong Kong financial market has dropped, but its impact should be limited on Hong Kong stocks. It has come to BOCI's attention that the HIBOR has nosedived since June this year, which has widened the interest rate gap between HKD and USD, even leading HKD to trigger the weak-side Convertibility Undertaking at 7.85 per USD. Consequently, the Hong Kong Monetary Authority (HKMA) began selling USD and buying HKD from June 26. In BOCI's opinion, the HKMA's sale of USD for HKD will only have a minimal impact on the Hong Kong stock market, as these funds are primarily low-risk and focused on high-interest deposits. Regarding the HSI, the broker forecasted it to reach 27,500 by the end of December this year, equivalent to a forward P/E ratio of 12.3 times, a 5% premium over the average forward P/E ratio of the past 20 years. Given southbound investors' focus on China's internet, telecom, and semiconductor industries, BOCI suggested investors should closely monitor some actively traded stocks in southbound trading, including BABA-W (09988.HK), MEITUAN-W (03690.HK), CCB (00939.HK), CHINA MOBILE (00941.HK), SMIC (00981.HK), and TENCENT (00700.HK). AAStocks Financial News |
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