Tagged: Hong Kong stocks

Stamp duty will go up? Hong Kong stocks high diving

Hong Kong stocks encountered a wide range in early trading today, and plunged in early trading. The Hang Seng Index rose more than 1% from the intraday to fall by more than 1%.

On the news, the media reported that Hong Kong’s Financial Secretary Chen Maobo said today that he would not rule out further increases in stock stamp duty.

Stamp duty will go up? Hong Kong stocks high diving

Earlier on February 24, Hong Kong announced a 30% increase in stamp duty. The Hong Kong stock market fell sharply on that day, and the Hang Seng Technology Index plummeted by more than 5% that day.

Hong Kong stocks encountered intraday diving again in early trading! Hong Kong further increase stock stamp duty?

The Hang Seng Index rose for a while in early trading, but plunged rapidly during the session.

Among the constituent stocks of the Hang Seng Index, Chinese stocks led the declines, with CNOOC, PetroChina, Sinopec Chemical Co., Ltd., China Unicom and other stocks leading the decline.

The Hang Seng Technology Index performed relatively better, the index once rose more than 3% in early trading today. Stocks such as QQ Music and Meituan rose sharply during the intraday session. However, as the Hong Kong stock market plunged, the gains of these two stocks subsequently narrowed sharply.

According to news from many media this morning, Hong Kong Financial Secretary Chen Maobo said today that the possibility of a further increase in stamp duty cannot be ruled out. The increase in stamp duty will not affect the competitiveness of the Hong Kong stock market. After the above news was fermented, the Hong Kong stock market saw another significant dive.

Prior to this, on February 24, 2021, Hong Kong suddenly announced a 30% increase in stamp duty.

On February 24, the Financial Secretary of the Hong Kong Special Administrative Region Government, Chen Maobo, announced in his budget that the Hong Kong government plans to increase stock stamp duty to 0.13% in order to increase revenue. Previously, buyers and sellers were paid 0.1% of the transaction amount.

The Budget mentions that it is not suitable to adjust the profits tax and salaries tax rates, nor does it have the conditions to introduce new taxes. The SAR government will continue to review, make timely adjustments, make research and preparations for new taxes, and conduct discussions at appropriate times to seek consensus.

Affected by the above news, the Hong Kong stock market’s Hang Seng Index fell sharply by more than 900 points, or 2.99%, and the Hang Seng Technology Index, which is concentrated in Hong Kong stock technology stocks, dropped by 5.1%. As one of the index stocks to measure the coolness and heat of Hong Kong stocks, the stock price of the Hong Kong Stock Exchange crashed that day, and it still fell 8.78% at the close. Since 2021, the “high fever” in the Hong Kong stock market has suddenly cooled down.

Southbound funds recently sold more than 20 billion Hong Kong dollars and bought more than 2 billion Hong Kong dollars in the morning

It is worth noting that after the recent adjustments in the Hong Kong stock market, the Southbound Southbound Trading Fund also began to show net selling.

The data shows that on February 24, Hong Kong Stock Connect sold a net HK$19.960 billion, which was the highest in history. On the next day, Southbound Trading resumed net purchases, with net purchases of HK$1.7 billion. However, on February 26, Southbound Stock Connect again sold a substantial net HK$7.595 billion. In general, in just a few days, the total net sales of Southbound trading funds exceeded 20 billion Hong Kong dollars.

This morning, Southbound Trading showed net buying again. As of press time, net buying exceeded 2 billion Hong Kong dollars.

Multiple factors affect the direction of the Hong Kong market. How does the organization look at it?

There are many factors affecting the Hong Kong stock market recently. In addition to the news of stamp duty adjustments, there are other factors that are also affecting Hong Kong stocks.

CICC believes that the performance of the Hong Kong stock market last week was not unremarkable. Not only did the major stock indexes have their biggest weekly decline since the outbreak, but also the single-day net outflow of southbound funds reached a new high since the opening. However, the agency believes that the violent market turbulence is mainly caused by external factors or one-off events, rather than from the fundamentals of the market itself. For example, the Hong Kong government unexpectedly announced on Wednesday that it might plan to increase stamp duty on stock transactions, triggering panic selling and outflows of large amounts of funds. However, the agency estimates that the actual impact of the increase in stamp duty is relatively limited. On the other hand, the US long-term Treasury bond yields have soared, triggering resonance in global stock markets, and it is difficult for the Hong Kong stock market to stand alone in this context.

CICC believes that it has to admit that Hong Kong, as a global financial center, is more sensitive to international market sentiment and liquidity, so external disturbances will inevitably affect its short-term performance. However, CICC believes that the basic factors that determine its long-term trend have not been affected, such as continuous improvement in growth prospects and a positive liquidity environment (resonant inflow of overseas funds and southbound funds).

CICC believes that in the medium-term dimension, the stock market has recently experienced sell-offs and violent turbulence, but instead provides a better medium-term buying point, especially high-quality targets with higher valuations. Looking ahead, in addition to external dynamics such as changes in U.S. bond yields, the upcoming two sessions and the 2020 performance period are also worthy of attention.

Regarding the adjustment of the constituent stocks of the Hang Seng Index, Yuekai Securities believes that from the Hang Seng Index Company’s adjustment of the Hang Seng Index constituent stocks and index weights, it can be seen that the new economy stocks and China concept stocks represented by medical health and large consumption have gained Pay more attention. At the policy level, the Hong Kong Stock Exchange will continue to deepen the reform of the listing system in October 2020, expand the scope of application of “same shares with different rights”, attract high-quality blue-chip white horse stocks to relist in Hong Kong, and enhance Hong Kong’s market competitiveness. The index adjustment also sent a positive signal to investors to strengthen the emphasis on new economic stocks and China concept stocks, and attract funds to the Hong Kong stock market.

SMIC to be “shielded” again


SMIC to be "shielded" again
Late January 6, smic in the Hong Kong stock exchange announcement, said the company won the OTCQX market (OTC securities of financial Markets, USA) operators of the OTC Markets Group notice, in accordance with the relevant administrative commands and related regulatory guidelines, the company will from January 6 at the end of the deal was withdrawn from the OTCQX market, the company’s securities will no longer qualified quotations or trading on the OTC Link ATS. According to the announcement, after the delisting of SMIC ASDR shares (” ASDR shares “, ADS) from the New York Stock Exchange in 2019, the company’s ASDR shares will be traded on the OTCQX market, the financial market for over-the-counter securities in the United States.

The move follows FTSE Russell’s announcement on January 4 that three companies, including SMIC, would be removed from the FTSE Global Equity Index Series and the FTSE China A-share index from the start of trading on January 7.

Evacuated from OTCQX

SMIC was withdrawn from the US over-the-counter market this time. In connection with a previous US ban, SMIC was concerned that SMIC was listed by the US Department of Defense as one of China’s military-related enterprises, according to a notice issued by SMIC on December 4, 2020. After the company is included in the list of military-related enterprises in China, Americans will be restricted from trading in securities issued by SMIC and related derivatives: Americans will not be allowed to buy securities of SMIC for 60 days from December 4, 2020 Beijing time; After 365 days, Americans may not trade in corporate securities. For specific regulatory restrictions, refer to the Executive Order issued by the President of the United States on November 12, 2020.

On the evening of December 20, SMIC also announced that the US Department of Commerce had placed SMIC and some of its subsidiaries and joint-stock companies on the “Entity List” for the purpose of protecting US national security and diplomatic interests. After the company is included in the “Entity List”, the supplier shall obtain an export license from the U.S. Department of Commerce for the products or technologies that are subject to the Export Control Regulations of the United States, in accordance with the provisions of the relevant U.S. laws and regulations. The company said the issue had a significant adverse impact on research and development of advanced processes up to 10nm and capacity building.

In the United States after the “shield” behavior, the capital market also set off bursts of ripples. FTSE Russell, wholly owned by the London Stock Exchange Group (LSE), announced on Thursday that it would remove the shares of three companies, including SMIC, from the FTSE Global Equity Index Series and the FTSE China A-share Index starting from the start of trading on January 7. Other index providers, such as the New York Stock Exchange, MSCI, S&P Dow Jones Indexes and Nasdaq, also began removing some Chinese companies from their indices following the president’s executive order.

Hong Kong stocks are up and down

FTSE Russell said it had removed some Chinese companies from the Global Index following the Trump administration’s executive order banning investments in “Chinese companies with military affiliations”. The decision was made in accordance with the sanctions imposed by the US to restrict investment.

FTSE Russell also said it would drop SMIC from the FTSE China 50 index and Hykvision from the FTSE China A50. Last month, FTSE Russell dropped eight Chinese companies, including Hikvision, China Railway Construction and China Aerospace Satellite, from its global indices.

FTSE Russell explained that it acted on the basis of feedback from users of the index and other stakeholders.

From the perspective of capital market performance, relative to the smooth performance of A-shares, recent SMIC stocks in Hong Kong have been ups and downs. On January 6, SMIC’s Hong Kong shares plunged in the afternoon, closing down nearly 10 per cent. On January 7, the Hong Kong shares of SMIC recovered the lost ground immediately and rose by more than 19% in the afternoon to close at HK $22, up 12.94%. The latest A+H total market value exceeded 220 billion.


Notably, in deleting eight Chinese companies last month, FTSE Russell said it would consider reintroducing them to its standard FTSE Russell index 12 months from the date of the lifting of sanctions. It also means that, assuming sanctions are lifted by the end of March next year, FTSE Russell will reconsider the inclusion of these companies in the FTSE World Equity Index Series at its semi-annual review in September 2022.

Although the company is currently facing many uncertain factors, still did not stop some institutions optimistic feeling. Cicc recently published research thought, smic’s future developing mature technology, will good increase shareholder returns for a long time, at the same time the smic stock valuations relative huahong have 45% discount, the bank believes the next few months as the U.S. government approvals gradually clear, the company stock valuation is expected to improve, suggested that continuous attention.