Hong Kong stocks worry about the mainland property market, the investment community is worried: Hong Kong stocks will be lost for 30 years | Investment | Economic Week

Mainland anti-monopoly, education “double reduction”, data security and other related policies have been introduced successively. A series of new policies have shaken up the valuation of technology stocks and education stocks, and the market is full of negative sentiment.

Xu Liyan pointed out that the performance of the Hang Seng Index was weak. Due to the “intensive” introduction of mainland policies, technology stocks have become “sufferers”. However, looking back at the past, there have been similar situations.

Hong Kong stocks have been lost for 30 years?

He predicted that the regulatory policies introduced by the Mainland next year will not be as frequent as this year. Hong Kong stocks may usher in a two-year calm period. On and off the market”.

Japan fell into a lost era in the 1980s. Its economy was close to saturation and growth was slowing down. However, the stock and property markets have been rising for a long time, attracting a large influx of funds and causing a rapid expansion of the Japanese asset bubble.

In the end, the Japanese government squeezed the bubble, the asset market collapsed, and land prices and housing prices plummeted. The Nikkei Index also plummeted, falling more than 80% over the past 20 years.

Xu Liyan worries that the mainland property market and Hong Kong stocks are also facing the same difficulties as Japan’s before.

He explained: “There is a strong bubble in mainland real estate. Once it bursts, it is dangerous. Although the central government (squeezing the bubble) originally intended to deflate the bubble, the policy sequelae is too late.”

He described real estate as a “money pop” for mainlanders. Many people put their savings here, which is equivalent to Americans using their savings to invest in U.S. stocks; once it is not handled properly, the impact on the market may be greater, and Hong Kong stocks will naturally also Affected by emotions.

Cathie Wood, the founder of Ark Invest, who has been optimistic about the Chinese market many times earlier, said that China is like “playing with fire” when he talked about China’s regulation in October.

The era of national speculation in U.S. stocks

Xu Liyan has similar views on the central government’s squeezing of the real estate bubble. He reiterated his understanding of the central government’s approach.

He continued that the scale of the property market in the Mainland is too large. Once the mood of the property market deteriorates, most investors are unwilling to “enter the market.” Then demand will become weak and fall into a vicious circle. Whether the market can regulate itself is really doubtful.

In fact, as early as June 2020, the central government proposed “no housing speculation”, strictly implemented policies such as purchase restrictions, and implemented an existing home sales system.

However, Xu Liyan pointed out that this policy is contradictory because local government revenue comes from land auctions. If land or property prices are suppressed, local government revenue will decrease and it will be difficult to explain to the central government. This disguisely prevents local governments from strictly implementing “no housing speculation.” , Leading to today’s dilemma.

Some commentators have pointed out that more and more retail investors are entering the US stock market, which has accelerated the bubble in the US stock market. Xu Liyan immediately retorted: “It’s all about it.”

He said that the United States has long been “all people speculating in stocks,” and the proportion of real estate in American assets is very low. U.S. stocks have not fallen into a bubble for many years.

He believes that it is understandable for investors to abandon Hong Kong stocks and switch to the U.S. stock market. After all, the world’s best companies are listed in the U.S., and technology stocks such as Tencent Holdings (00700), Alibaba (09988) and Meituan (03690) have changed. “cyclical shares” (cyclical shares).

Although there is currently no evidence that “national speculation in US stocks” will exacerbate the US stock bubble, the US stock market has indeed begun to weaken recently.

When the U.S. debt auction meets Thanksgiving

As expected by the market, US Federal Reserve Chairman Jerome Powell was nominated for re-election by President Joe Biden, and Lael Brainard, who belongs to the “Dove” and one of the Fed’s directors, served as the “second in command.” Vice Chairman.

Isn’t this good news for the market? Xu Liyan said frankly that “the situation is strange.” After the announcement of the above news, the three major U.S. stock indexes surged. After that, the index plummeted and interest rates rose sharply.

He estimated that the U.S. Thanksgiving holiday is approaching and there are only less than four trading days in U.S. stocks, and market trading has decreased, which may take advantage of the trend to take advantage of it; in addition, the auction of U.S. short-term Treasury bonds is not going well.

As of this Thursday (25th), according to the CME Group FedWatch interest rate futures tool, the market predicts that the probability of a rate hike in June 2022 is 43.1%, which is one month earlier than the earlier July (see Chart 1) ; The possibility of raising interest rates twice and three times before the end of next year is 23.6% and 30.1% respectively, reflecting that the market still has no consensus on the pace of interest rate hikes.

And Jim Vogel, the vice chairman of FHN Financial, an American securities firm, explained that the long holiday is approaching, “no one will resist the deployment of the air force”, and the European Central Bank has also released more eagle interest rate hike expectations, and the auction sale of U.S. five-year and seven-year Treasury bonds. The weak situation caused the market to fall this time.

The poor performance of US short-term Treasury bond auctions means weaker demand and a sharp rise in interest rates on 10-year bonds.

A similar situation occurred on Thanksgiving in 2012, when the Treasury bond auction cycle rarely overlapped with the Thanksgiving holiday, and trading was also very weak.

Technology stocks and traditional stocks rotate

Xu Liyan believes that U.S. stocks have once again entered the stage of sector rotation, the U.S. dollar and the 10-year Treasury bond interest rates have both soared, and traditional stocks have once again performed strongly, but this does not mean that technology is “non-operational.”

He admitted that the rapid increase in long-term bond interest rates has had an impact on the valuation of technology stocks, but the impact is not significant. He believes that technology companies with solid businesses can use growth to offset the problem of discounted cash flow.

According to historical data, a few months after the U.S. interest rate hikes over the years, most U.S. stocks tended to strengthen.

Xu Liyan is not worried that interest rate hikes or interest rate hikes are expected to bring down US stocks and repeat the “Blood Christmas Eve” of 2018.

He said: “The key lies in the pace of interest rate hikes. There is a difference between an increase of half a per cent, a 1 per cent, or an increase of 1.5 per cent. At present, the remarks of relevant officials are still biased, but the market expects that the authorities will hold an interest rate meeting in mid-December. , Discuss speeding up “recovering water”.”