Go! Buy H-Shares!

One thing I've noticed about the surge of Chinese money into Hong Kong: I've yet to see anyone with a megaphone (in China) raise the question of whether A-shares are overvalued, rather than H-shares undervalued. Here's a case in point, the Chinese Securities Journal. Imagine if Barron's was put out by the U.S. Treasury Department and you have some idea of the weight this has to the average Chinese investor. Their message is simple: Go! Buy H-Shares! It sounds more like an invasion rather than a rational investment strategy.

Hong Kong stock market continued to be active recently, overall significantly larger volume also frequently emerge soaring stocks. Analysts believe that the Hong Kong stock fundamentals did not show significant changes compared with the previous, but recent policy favorable to bring new purchasing power, stimulate investors enter the market. Compared to the A shares, the Hong Kong stock market valuation is low, there is a compensatory growth space, the short-term rally is expected to continue.

Policy is expected stimulus funds, "south"

Since the end of November last year, A-share bull market started the journey, the Shanghai Composite Index rose more than 60 percent, compared to the Hong Kong stock market was flat, the Hang Seng Index rose only 8.5%. However, the Hong Kong stock market in the past two weeks, suddenly heating up the heat onHang Seng Index rose 3.2%, the Hang Seng China Enterprises Index rose 6.4 percent more, the Hong Kong stock market capitalization reached a record high of HK $ 27.3 trillion; March 31 the same day, the Hong Kong stock turnover amounted to $ 149.6 billion, a record high since January 2008.

It is worth noting that Hong Kong and Shanghai via Hong Kong stocks through the trading volume last week under continuous refresh the record, from HK $ 1.5 billion daily average had soared to more than HK $ 5 billion, April 2, hitting a record high of HK $ 6.0 billion. HKEx Chief Executive Officer Charles Li said that this show Hong Kong-listed mainland investors for investment interest continues to heat up.

Analysts generally believe that good policy intensive introduction is important HK fuse blew . March 27, the Commission issued "public offering of securities investment funds to participate in Shanghai and Hong Kong through trading guidelines" can route through Hong Kong and Shanghai raised funds through investment in the Hong Kong market. Then CIRC issued a notice explicitly Mainland insurance company can invest in Hong Kong GEM stock. Analysts said the new measures for incremental funding HK enormous imagination, combined with Shenzhen Tong expected a boost of funds "south" was evident to the Hong Kong stock market.

Securities strategist BDA Cen Zhiyong that, compared with the previous downturn, Hong Kong stocks fundamentals itself does not appear significant changes, but the new measures related to the Shanghai and Hong Kong through the introduction of new purchasing power for Hong Kong stocks, prompting investors market.

Cen Zhiyong said investors look forward to Shanghai and Hong Kong will pass from the original becomes dominated by retail investors led by institutional investors. And retail are different, the more value the company's institutional investors, fundamental analysis and valuation, so expect some low valuation of the stock is expected to receive funding sought, which became a major factor supporting the relevant company's share price rose.
　　
Luo Qiang, general manager of Qilu full Research Department of the China Securities Journal reporter, said Hong Kong stocks strong boost there are two main factors, namely the A shares a strong trend, driven by capital inflows throughout the Greater China market; the second is the recent introduction of new regulatory policies, Hong Kong stocks through stimulation of active trading. Additionally investors expect the upcoming Shenzhen GEM may pass into them, so the GEM significant gains over the past week, trading volume hit a new high of nearly two years.

Luo Qiang said over the recent increase in funds from the Mainland, Hong Kong market, compared to foreign institutions continue to lighten up, which means the views of local and foreign market differences appear. And with the A shares is hot, the Hong Kong stock gradually catch up, foreign funds have been profitable cash face great pressure to perform, it is possible to carry out the operation to cover short positions, it is expected that the next twelve weeks a large number of blue-chip liquidity increases the opportunity exists.
　　
"The value of depression" attractive highlights

Cen Zhiyong that, compared with the A shares, the Hong Kong stock valuation is significantly lower, may be regarded as "the value of depression." Many companies listed in Hong Kong, the main business in the Mainland, Hong Kong and international investors may not familiar with, so there is no large-scale investment, but mainland investors will be easier to understand their business, and therefore in the public fund allowed to invest in Hong Kong stocks after They will feel that the valuation of such shares are very cheap.
　　
From a number of statistical indicators, the Hong Kong market valuation is indeed low. Hong Kong stocks rose this year due to lag far behind the A shares, AH shares widened. Wind data show that, after less than 100 long-term Hang Seng AH Premium Index surged 136.52 at the end of March to three and a half high, which means that H shares relative to A shares more than 30% discount. At present, the Hang Seng Index trades at 10.2 times, compared to earnings ratio of 17.75 times the Shanghai Composite Index, the S & P 500 trades at 19.5 times, Euronext 100 Index trades at 26 times.
　
Analysts expected, with the two-way flow of funds in the Mainland and Hong Kong stock markets accelerated, the two will tend to narrow spreads. GF Securities analyst Chen Guo believes that the current situation the Hong Kong stock market value of depression significantly to the A-share valuation system point of view, many of the underlying valuation of the Hong Kong market is very attractive part of the Hong Kong stock valuations have gradually coming closer to the A-share trend. Cen Zhiyong think, AH spreads stocks, particularly lower valuation than peers mainland shares, Chinese stocks listed in Hong Kong is only temporary, and the shares are unique to Hong Kong there is a big chance. If the A stocks continued strong, but also help the Hong Kong stock valuation case compensatory growth occurs.
　　
Hot in the market at the same time, some of the risk factors are also worth noting. Cen Zhiyong Hong Kong stocks rally is expected to continue until the valuation differences between A-shares and Hong Kong stock valuations narrowed. He reminded investors that if the valuation gap between the two narrowed, could mean an increase of HK Limited. But can also pay attention to the Hong Kong stock through volume changes, if the transaction size decreased, but also means less money south, Hong Kong stocks rally may have peaked.

Also , some analysts said that the current mainland funds into the Hong Kong stock only the vanguard, Shenzhen and Hong Kong have to wait until a large force through policies will follow up on the floor. Hong Kong stocks rose too fast and short-term follow-up disk access funds could not keep up, need to guard against short-term liquidity risk due to the callback.

China Securities Journal:走！买港股去!