The US stock market was closed on 4 September 2017, and US stocks plunged when the stock market reopened on 5 September 2017. The fall is normal, as it is simply the market’s reaction to North Korea’s nuclear tests.
Hong Kong stocks fell too, but there were some blue chips that finally rebounded. Though the Hang Seng Index fell by 0.46% on 6 September (Wednesday), there were 16 Hang Seng Index constituent stocks that rose against the market.
Thus, I wouldn’t say that the market was in chaos.
Hong Kong mid cap real estate stocks performing decently
Penny stocks and shell company stocks suffered a heavy blow a few months ago and have failed to recover till this date. Such a situation has led to some investors focusing all their attention on blue chip stocks instead.
I have also noticed that several midcap real estate stocks are performing very well.
For instance, the stock price of China Aoyuan Property Group Limited (3883.HK), which was recommended by renowned Hong Kong stock market commentator Chan Wing Lok (陈永陆) in his Apple Daily column, surged by 15.45% within a day.
Apart from that, here are more midcap real estate stocks that have been performing very well lately: Yuzhou Properties Company Limited (1628.HK), Kaisa Group Holdings Ltd (1638.HK), Logan Property Holdings Co Ltd (3380.HK), and CIFI Holdings Group Co Ltd (884.HK).
Yuzhou Properties is headquartered in Xiamen, where Xi Jinping had served as vice mayor from 1985-1988. The recent BRICS meeting (consisting of Brazil, Russia, India, China, and South Africa) was also held in Xiamen.
Xi Jinping even gave an introduction of the city at the start of the opening ceremony. It seems that the Chinese central government is giving Xiamen a lot of attention and support.
Hang Seng Index constituent stocks “too high to reach”
Despite the Hang Seng’s fall on 6 September (Wednesday), a lot of money went southbound.
The Shanghai-Hong Kong stock connect registered a balance of 9.1 billion Yuan, while the Shenzhen-Hong Kong stock connect registered a balance of 9.6 billion Yuan.
China Aoyuan Property Group was a hot stock on the Shenzhen-Hong Kong stock connect.
Previously, much of the southbound (mainland China to Hong Kong) investors’ money went into pushing up the “big three” players— (Tencent Holdings Ltd, HSBC Holdings PLC, and AIA Group Ltd).
The situation has changed drastically, as second-tier, midcap stocks are now in the limelight.
The rationale is that the stocks that can be included in the Shanghai-Hong Kong and Shenzhen-Hong Kong stock connect could not be the shell company stocks whose bubbles had burst previously.
Thus, investors’ funds from mainland China are taking the official southbound channels (i.e. SH-HK and HZ-HK stock connect) to chase second-tier midcap stocks.
Even if these stocks are subjected to speculation, it is unlikely that they would go through roller coaster rides. In other words, investors feel that they are safer.
On the other hand, many feel that Hang Seng Index constituent stocks have risen high beyond reach, and thus they choose to speculate second-tier midcap stocks instead.
Meanwhile, Hong Kong’s Chief Executive Carrie Lam Cheng Yuet-Ngor has said that the government of the Hong Kong Special Administrative Region would roll out plans to build houses exclusively for local first-time buyers.
The flats should be subsidised and priced lower than market rates too. Would it bring about a change to the current property market then?
This article was translated from Chinese to English by Chen Xushuang. Click here to read the original article.