SEC implements new delisting rules, Hong Kong, U.S., and China stocks

The U.S. Securities and Exchange Commission (SEC) formally implemented the final amendment of the “Foreign Company Accountability Act”, requiring overseas listed companies to comply with audit regulations, and the risk of China’s concept stocks being delisted increased. The share prices of Chinese concept stocks listed on the secondary or dual primary listing in Hong Kong generally fell on Friday, and the shares of the new economy industry were the hardest hit areas. However, benefiting from the Hong Kong Stock Exchange (00388), which was delisted from the US and the old economic stocks, the Hang Seng Index rebounded after a sharp drop of 337 points on Friday. 22 points (0.09%).

Ali ADS once fell another 10%

Many Chinese concept stocks did not stop their diarrhea during the US stock market. Alibaba (09988)’s American Depositary Shares (ADS) once fell more than 10% compared with Hong Kong, and the closing decline narrowed to 8.61%. JD (09618) ADS is also 5.5% lower than Hong Kong. As for the Chinese concept stocks that have not returned to Hong Kong, their U.S. stocks have generally declined. Didi Chuxing (DIDI.US), which announced its delisting, has plummeted by more than 22%, Pinduoduo (PDD.US) has fallen 8.16%, and NIO. US) and Shell Search (BEKE.US) fell 11.19% and 2.81% respectively.

A storm of delisting of China’s concept stocks struck, and Ali fell for 4 consecutive days and set a new low for listing in Hong Kong. It fell 2.6% on Friday. NetEase (09999), JD and Bilibili (09626) fell 4.8%, 5.9% and 7.2% respectively. The other two heavyweight new economy stocks Tencent (00700) and Meituan (03690) both fell more than 2%, dragging the HSI to a maximum of 337 points.

The old economy underpins the market, the Hang Seng Index fell slightly 22 points at the end

In the afternoon, the A shares continued to rise and the old economic stocks improved, leading the Hang Seng Index to rise by 13 points, closing at 23,766 points, only down 22 points. The Hang Seng Division index was the most injured, falling below 6000 points, closing at 5925 points, down 92 points (1.53%). The H-Share Index fell 50 points (0.6%) to close at 8455 points.

Changes in the constituent stocks of the Hang Seng Index will take effect next Monday, and passive funds will be the first to switch horses on Friday, pushing up market turnover to 165.9 billion yuan. Four blue-chip upstarts developed individually before the formal dyeing. In addition to JD and NetEase, ENN Energy (02688) also fell, down 1.8%, and Run Beer (00291) edged up 0.2%. The state index upstart Cinda Biopharmaceutical (01801) tumbled 1.5%, while China Evergrande (03333), which was excluded from the state index, fell slightly by 0.9%. The net inflow of “Southbound Trading” increased to 3.36 billion yuan, the largest in a single day in more than a month. Southbound funds have swept into Hong Kong stocks for 8 consecutive days, and accumulated net purchases of 12.5 billion yuan.

The Hang Seng Index night futures closed at 23,380 points, down 405 points, and 387 points lower; the ADR Hong Kong Stock Ratio Index closed at 23,268 points, down 497 points from the Hong Kong market. Summarizing the whole week, the Hang Seng Index fell 313 points (1.3%), and fell for three consecutive weeks, falling a total of 1561 points (6.16%). The National Index and the Science Index fell by 120 points (1.41%) and 226 points (3.68%) respectively, which also fell for 3 consecutive weeks.

Hong Kong stock market earnings ratio is only 11 times ready to rebound

Li Zhenhao, chief investment strategist at the Bank of East Asia (00023), said that the price-to-book ratio of Hong Kong stocks fell below 1 times, and the forecasted price-earnings ratio also dropped to about 11 times. In the past 10 years, there have been 5 times when the price-earnings ratio fell to the level of 11 times. Pick up. He pointed out that the Hong Kong stock market may usher in a rebound wave in the downward track in the next three months, with a chance to climb to the level of 26,500 to 27,100. Li Zhenhao believes that investors should pay attention to the old economic stocks when catching the rebound. Although the valuation of new economic stocks is attractive, the focus of the market is not valuation, but the rectification of industry supervision, so it is still not suitable for the short-term.

Pang Ming, chief economist and chief strategy analyst at Huaxing Securities (Hong Kong), pointed out that under regulatory pressure and uncertainty, the performance of China Concept Stocks will be more volatile in the future. He also mentioned that the Hong Kong Stock Exchange has improved the listing system of overseas issuers earlier, and the return of Chinese concept stocks can bring higher attention, liquidity, representativeness, trading volume and valuation to Hong Kong stocks in the long run. However, in the short term, due to the high correlation between Hong Kong stocks and U.S. stocks, coupled with the inclusion of a large number of second-listed companies in the Hang Seng Index and its related indexes, the adjustment pressure of China’s concept stocks has increasingly obvious transmission effects on Hong Kong stocks.

As for A shares, the Shanghai Index closed at 3,607 points on Friday, up 33 points (0.94%). The Shenzhen Component Index rose 126 points (0.86%) to close at 14,892 points. The turnover of the two cities reached RMB 1.13 trillion. There was a net purchase of 9.22 billion yuan on the “Shanghai and Shenzhen Stock Connect” on Friday. The Shanghai Stock Exchange Index earned 43 points (1.22%) throughout the week, rising for 4 consecutive weeks. The Shenzhen Component Index rose for 5 consecutive weeks, after gaining 114 points (0.78%) in the past week.



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