Last week, foreign capital continued to flow out of the Hong Kong stock market, but fortunately, southbound funds flowed in against the trend, and their trading volume still accounted for over 40%.
According to data from China International Capital Corporation (CICC), from November 14th to November 20th, the net outflow of allocated foreign capital from Hong Kong stocks, measured by EPFR, expanded, while the net inflow of ADR narrowed. Among them, the net outflow of Hong Kong stocks expanded to 1.819 billion US dollars (compared to the previous week's net inflow of 705 million US dollars), reaching a new high in nearly 5 years; The net inflow of ADR narrowed to $81 million (compared to the previous week's net inflow of $848 million).
The net outflow of active and passive foreign investment from Hong Kong stocks is accelerating. From November 14th to November 20th, the net outflow of active foreign investment in the Hong Kong stock market expanded to 454 million US dollars (compared to the previous week's net outflow of 283 million US dollars), while passive foreign investment turned into a net outflow of 1.365 billion US dollars (compared to the previous week's net inflow of 422 million US dollars); The net outflow of ADR active foreign investment has expanded to 64 million US dollars (compared to the previous week's net outflow of 3 million US dollars), while the net inflow of passive foreign investment has narrowed to 145 million US dollars (compared to the previous week's net inflow of 850 million US dollars).
Significant inflow of southbound funds
However, against the backdrop of foreign capital flowing out of Hong Kong stocks, southbound funds continued to flow into Hong Kong stocks last week, with trading volume accounting for more than 40% (44.07%), which is the main support for market funds.
According to the AH premium model and sensitivity analysis constructed by CICC, as the central level of the US dollar index rises, the reasonable fluctuation range of the new AH premium is roughly 142-149. There is still a risk of upward movement in the short-term US dollar index, and there may also be upward pressure on the corresponding AH premium.
How is the valuation of the Hong Kong stock market?
Last week, the Hang Seng Index PETTM fell to 8.74x, and the risk premium (relative to US Treasury) rebounded to 7.03%, close to the rolling 5-year average. From the perspective of PB-ROE, the Hang Seng Index and Hang Seng State Owned Enterprises Index have cost-effectiveness among major global stock indices.