Reporter Wang Zhaohuan reports from Beijing
In 2018, A shares continued to weaken, and the same share of the Hong Kong stock market suffered a setback. Since June, Hong Kong stocks have entered a volatile downward channel. As of October 19, the Hang Seng Index has fallen by 5,000 points, the biggest drop being 20%, and the 25,000 mark is facing challenges.
It is noteworthy that, in the context of weak market, compared with the slow pace of A-share IPOs, the HKEx is busy with business, especially after the new rules for listing on the motherboard at the end of April this year, the IPO team composed of mainland enterprises "surged to".
However, with the adjustment of the market, the days of "unicorns" such as millet and American Dolls listed in Hong Kong are not good. Although they have completed the financing, they have suddenly increased their breaking rate at the same time of high valuation and high financing.
According to statistics by ifind, as of October 16, there were 171 new shares listed in Hong Kong this year, 134 of them broke, with a breaking rate as high as 78.4%, much higher than that of A shares, while the unicorns all broke, with a breaking rate of 100%.
Affected by the market downturn, on October 19, Metro Review (03690) and Millet Group (01810) both hit new lows of 52.8 Hong Kong dollars and 12 Hong Kong dollars, down 23.4% and 29.4% from the offering price.
The latest report from Anxin Securities further shows that in the first three quarters, the breaking rate of new shares in Hong Kong reached 51% on the first day of listing, and 81% in the first month after listing. With the increase of supply, the breaking rate of new shares in 2018 rose sharply to 2017, and the high valuation and breaking rate of new shares coexisted.
In the view of the industry, investors in the A-share market have a strong speculative atmosphere. Relatively speaking, the Hong Kong market is more mature, more institutionalized and more rational than the mainland. Although some unicorns were speculated in the early stages of the listing, their stock prices eventually returned to valuation at the cost of breaking, which is the rational performance of a mature market investor.
Bustling Hong Kong Stock Exchange
In 2018, the Hong Kong Stock Exchange was in a terrible fire. It was common for two companies to knock gongs one day, and it was not surprising that eight companies went public at the same time.
The latest report from Deloitte China shows that in the first three quarters of 2018, the number of new shares and the total amount of financing on the Hong Kong Stock Exchange hit a record high, with 158 new shares listed, with HK $243.4 billion in financing. The number of new shares and the amount of financing increased by 49% and 184% compared with the same period in 2017.
Among them, the number of new shares on the main board continues to exceed the GEM, and the difference is gradually expanding, three new economic giants, China Tower H shares, millet group, the United States group comment accounted for about 30% of the total financing.
Peng Hai, an analyst with Lianhe Securities, pointed out that the development of Hong Kong stock market in 2017 and 2018 has entered a new stage. With the launch of the H-share full circulation pilot in 2017, many new economic enterprises can go to Hong Kong to list through this path.
At the end of April 2018, the HKEx announced the newly revised Listing Rules, and decided to add sections on biotechnology and different voting rights to the motherboard listing rules. It will open up a green channel for qualified biotechnology enterprises and dual equity structure enterprises to list in Hong Kong. This reform is also seen as the most important listing mechanism reform in Hongkong market in the past 25 years. The reform of the listing system of the HKEx will help attract more new economic companies to come to Hong Kong and activate more capital inflows into the stock market.
In fact, the more market-oriented registration system in the Hong Kong stock market has made the Hong Kong stock market more tolerant and efficient, but the drawback is that the breakout rate of Hong Kong stocks is higher, and the IPO P/E ratio of most companies is lower than that of A shares.
It is not surprising that a unicorn breaks its hair frequently. "This is the choice of the market. It's normal." Zhu Bangling, a senior market commentator, said in an interview with the China Times reporter.
According to Eastern Wealth Choice data, 145 listed companies in Hong Kong suffered a tragic break in the first three quarters of 2018, with a break rate of 90.06%; in the same period of 2017, 107 listed companies traded, 47 rose, one was flat, 59 broke, with a break rate of 55.14%. In terms of P/E ratio, the average daily P/E ratio of IPOs is 33.33 times, while the average P/E ratio on September 30 is 10.90 times.
According to the latest report issued by Anxin Securities, from 2010 to the first three quarters of 2018, the average price-earnings ratio on the first day of IPO is higher than the annual average yield of the Hang Seng Index.
"The Hong Kong stock Unicorn has behaved so badly that some of its performance is not satisfactory." In an interview with the Huaxia Times, a senior market participant said frankly, for example, Ping An Hao doctor, from 2015 to 2017, although annual revenue showed a growth trend, but its losses also showed "growth". Ping an good doctor accumulated a deficit of 2 billion 84 million yuan in 3 years, in which he lost 1 billion 2 million yuan in 2017. Performance is poor, and stock prices are hard to please.
"From the P/E ratio changes, we can see that although the A-share market has entered a cold winter, but the speculation atmosphere is still strong; by contrast, although the average P/E ratio of the first day of the Hong Kong stock market is higher than that of the A-share market, but in the follow-up investment activities, the market will quickly return to the rational valuation of the companies." The above said.
Anxin Securities report pointed out that in the first three quarters of 2018, the Hong Kong stock market and the mainland capital market IPO policies have undergone major changes, but overall, the policy focus has been around supporting the "new economy" corporate listing keynote. Looking forward to the IPO market in the fourth quarter of the two places, the new session of the A-share Development and Examination Commission is imminent, the auditing will become more stringent or trend, Hong Kong stocks in the fourth quarter may still usher in the listing of new economic enterprises.
The impact of US stocks can not be ignored
Recently, the decline has become the key word of emerging market performance, and the US stock drop is the source of risk. Then, how does the US stock fall affect Hong Kong stocks? Will there be second waves in the future?
Guangfa Securities analyst Liao Ling believes that the U.S. stock market from the "dessert zone" to "trigger point", the risk of decline has not been fully released. Non-fundamental factors such as interest rate volatility, policy and event perturbations may cause the "butterfly effect" of U.S. stock declines, and the weakening of EPS growth expectations increase the risk of future U.S. stock declines.
Specifically, the impact mechanism of U.S. stock falls includes the transmission of volatility risk, riskless rate of return and cross-border capital flows in three aspects: high volatility of U.S. stocks on the risk of Hong Kong stocks "contagion" is the most direct. The Hongkong stock market has an offshore nature and is vulnerable to fluctuations in the global market. Since 1990, the Hang Seng Index has fallen by more than 4% a day, mostly against the background of high volatility in the global market. The high volatility of US stock market is closely related to the volatility of Hong Kong stock market. Historically, the trend of VIX and HSIVI index is highly correlated.
At the same time, under the linked exchange rate regime, the rise of US long-term interest rates has put upward pressure on the risk-free yield of Hong Kong stocks, while the rise of US bond yields and the rapid decline of US stocks have led to increased risk aversion demand and cross-border capital outflows.
Liao Ling pointed out that short-term overselling awaited the landing of the Mainland reform policy, the risk of Hong Kong stocks in the medium term has not been released, the impact of U.S. stocks has not ended, market stability still depends on the Mainland policy clarification.
It is noteworthy that the number of repurchases and the number of repurchases by Listed Companies in Hong Kong have increased significantly in recent years. A total of 83 companies have made 524 repurchases in September, the highest in a single month.
"Repurchase can play a positive role in stock price in the short term, but the excess return is not significant in the medium term." The above senior market people said.
Statistics show that the decline in Hong Kong stocks since June 2018 has been accompanied by a decline in earnings and a contraction in valuations. From the dynamic valuation point of view, the current Hang Seng index Forward PE fell to 10.7 times, is close to the 10-year mean-1 standard deviation; from the static PE point of view, the Hang Seng index valuation globally low, and in the historical low point.
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