According to the website of hkex, on November 15, the Hong Kong Exchanges and Clearing Limited ( $HKEX (00388.HK)$ ) announced that it will collaborate with the leading index company hang seng index co. to launch an index tracking the overall performance of large Chinese enterprises under the Stock Connect, further enriching the product ecosystem of Hong Kong's capital markets.

The hang seng hong kong stock exchange stock connect chinese enterprise index (stock connect chinese enterprise index) will be launched on November 21, 2024, making it the first joint naming index of hkex and hang seng index co. The constituent stocks of the stock connect chinese enterprise index include the 80 highest market cap Chinese enterprises that are listed on the Hong Kong, Shanghai, and Shenzhen stock exchanges and can be traded via the Stock Connect.

Citic sec believes that after the short-term impact ends, Hong Kong stocks may experience an upward trend, and now is a very cost-effective time to invest in Hong Kong stocks, particularly recommending the technology sector.

Major announcement from hkex

Today, the Hong Kong Stock Exchange announced that it will work with the leading hang seng index company to launch an index tracking the overall performance of large Chinese enterprises under the Stock Connect, further enriching the product ecosystem of Hong Kong's capital markets.

The China enterprises index under the Shanghai-Shenzhen-Hong Kong Stock Connect will be launched on November 21, 2024, and it is the first co-branded index by the HKEX and Hang Seng Index Company.

The components of the China enterprises index under the Shanghai-Shenzhen-Hong Kong Stock Connect include the 80 largest Chinese companies listed on the Hong Kong, Shanghai, and Shenzhen stock exchanges that can be traded through the Stock Connect. This cross-market index covers different sectors in a balanced manner, providing global investors a comprehensive and authoritative benchmark to capture investment opportunities in the Chinese market.

Bonnie Chan Yi-ting, the CEO of HKEX Group, stated: "This year marks the 10th anniversary of the Shanghai-Shenzhen-Hong Kong Stock Connect, and we are pleased to collaborate with Hang Seng Index Company, combining the expertise of a world-leading exchange group and a leading index provider in the region. The Stock Connect has greatly enhanced the importance and competitiveness of the Hong Kong market. The launch of the China enterprises index under the Stock Connect demonstrates our commitment to enhancing the connectivity between the mainland Chinese and international markets, providing investors more choices and opportunities, and continuing to develop emerging businesses. We look forward to working closely with asset managers, issuers, and market participants to develop more new products based on this index, further enriching the product ecosystem of the Stock Connect and making the Hong Kong capital market more dynamic."

The CEO of Hang Seng Index Company, Wu Wanwen, stated: "Today, I am pleased to announce the launch of the Hang Seng Hong Kong Exchange China Enterprises Index under the Stock Connect with HKEX. This index is an extension of our flagship Hang Seng China Enterprises Index, further incorporating large A-shares that meet the connectivity trading qualifications, making it a comprehensive Chinese index that helps global investors seize Chinese opportunities through the Stock Connect. With the combined advantages of our company and HKEX, and the continuously increasing trading volume under the Stock Connect, the launch of the Hang Seng Hong Kong Exchange China Enterprises Index will further assist Hong Kong in playing the role of a 'super connector' and facilitate the connection between the mainland and the international market."

How will the market play out?

Recently, the global market has not been calm, and Hong Kong stocks have once again fallen into a technical bear market. How will the stock market play out next?

China Securities Co., Ltd. believes that Hong Kong stocks have been continuously adjusting since October 8, and the Hang Seng Index has dropped more than two-thirds of the gains from September 25 to October 7. During the correction period, both bullish and bearish factors have been present, so the current correction magnitude of Hong Kong stocks should be relatively sufficient. With the recent decline in Hong Kong stocks and the divergence in trends between Hong Kong and A-shares, the valuation of Hong Kong stocks and the AH premium once again reflect high cost-effectiveness. Therefore, after the short-term shock ends, Hong Kong stocks may usher in a rising trend, and now is a great time to invest in highly cost-effective Hong Kong stocks, particularly in the technology sector.

China Securities Co., Ltd. also stated that Trump's tax reduction proposal and pressure on the Federal Reserve for interest rate cuts are beneficial for the total liquidity overseas, while his trade restrictions against China are unfavorable for the distribution ratio of overseas liquidity to Hong Kong stocks. Since Trump tends to prioritize domestic economic policies, liquidity is expected to return to Hong Kong stocks after the recent short-term shock ends, making now a very cost-effective time to invest in Hong Kong stocks. Among the various sectors of Hong Kong stocks, the technology and internet sector stands out with significant earnings recovery, benefiting from the wave of dividends and buybacks in terms of valuation, and gaining favor with foreign capital in terms of liquidity, which is worth paying attention to.

According to citic sec's research reports, looking ahead to 2025, the main investment line in the technology sector will continue to focus on AI. With continuous advancements in large model capabilities in areas such as multimodal and logical reasoning, AI is expected to deeply integrate with the digital transformation across various industries, from computing power infrastructure to the implementation of end applications, continuously driving investments in the technology sector. It is recommended to pay attention to investment opportunities in three directions: AI computing power, applications and data, and AI terminals. As the macroeconomic environment warms and industrial policies are gradually implemented, it is suggested to pay attention to investment opportunities in the segmented technology sectors such as internet plus-related, Android consumer electronics, autos industry chain, semiconductors, and carriers against the backdrop of demand recovery.

Editor/Somer