Daily Investment Strategy

Daily focus：HKEX（388）

To promote trading of more stocks in RMB and improve market liquidity, China and Hong Kong are conducting technical preparations at full speed to implement the inclusion of RMB trading counter under Southbound trading of Stock Connect. Meanwhile, HKEX is reviewing with the SFC the trading unit system, or the so-called "board lot" system, and will put forward proposed enhancements this year, so that trading arrangements can better meet liquidity characteristics of shares of different sizes and investment needs, as well as facilitate trading and improve efficiency. The Hong Kong Exchange can benefit from the potential increase in trading activity. The IPO subscription of MIXUE GROUP was closed at noon of 26th. The total margin subscription amount increased to over $1.82 trillion, with oversubscription ~5,226x. As the pace of IPO issuances in China's A-share market slows and geopolitical factors diminish the appeal of U.S. listings, Hong Kong is becoming the preferred destination for Chinese companies to go public. Earlier reports indicated that regulatory bodies in both mainland China and Hong Kong have requested some of the world's largest investment banks to help expedite listings for Chinese enterprises in Hong Kong. Since last October, qualified companies are expected to undergo regulatory assessments within 40 business days, while those with a projected market value of HK$10 billion will benefit from a "fast-track approval timeline" of no more than 30 business days. In summary, fully compliant applications could complete their processes within six months. In fact, the market showed significant recovery in 2H24, raising HK$69.5 billion in capital, accounting for over 80% of the annual fundraising. Throughout 2024, Hong Kong recorded 63 IPOs, raising a total of HK$82.9 billion, a 78% increase compared to 2023. The IPO fundraising amount has returned to the top five in the global IPO market, reflecting a resurgence in market sentiment that is expected to continue into 2025, with Bloomberg estimating that fundraising could reach HK$170 billion—doubling compared to 2024—benefiting the HKEX through increased listing fees.. Target price is HK$380.

Tariff concerns worsened further

The S&P 500 eked out a gain on Wednesday, though it ended well off session highs as fresh tariff concerns soured investor sentiment just ahead of Nvidia's quarterly earnings report. During the trading session, stocks were forced to give up most of their gains because U.S. President Trump confirmed that tariffs on Canada and Mexico would take effect on April 2. He also threatened to impose a 25% tariff on the European Union, specifically mentioning auto tariffs, with more details expected soon. Meanwhile, Trump further fueled fears of a global trade war by stating that he had ended an agreement with Venezuela, which was reached during the Biden administration in exchange for free elections, as Venezuela refused to take back illegal immigrants. Additionally, Nvidia reported fourth-quarter earnings that exceeded Wall Street expectations on Wednesday after the market closed. The company also provided strong guidance, indicating that the chipmaker is confident in maintaining its AI-driven historic growth in 2025.

Hong Kong Stock Connect had a net inflow of HK$10.4bn Wednesday of which Alibaba (9988) had the largest net inflow, reaching HK$4.99bn; followed by Xiaomi (1810). Tracker Fund (2800) recorded the largest net outflow at $2.11bn, followed by China Mobile (941).