After the Hong Kong stock market plummeted, did Li Ka-shing's repurchase "get more and more down" miscalculated?

| Market Watch

  Author: Li Jun

  Looking at the history of Hong Kong stocks in the past decade or so, whenever the market is at the bottom, there are always news of Li Ka-shing’s companies repurchasing or shareholders’ increase in holdings, as well as blue chip repurchases such as Tencent Holdings (00700.HK).

During the adjustment process of Hong Kong stocks in the past three months, the management of these companies repurchased them by "buying the more they fell."

  The emergence of "Black Monday" in Hong Kong stocks was largely dragged down by real estate and finance.

On September 20, during the Mid-Autumn Festival holiday, the Hong Kong stock market, which was not closed, suddenly staged a "thousand-point plunge" on September 20. Before the close of trading on Monday, the Hong Kong stock market had fallen below 24,000 points, which was last year. For the first time since October, to the close of the day, the Hang Seng Index fell 3.3%, dropping about 1,000 points; on September 21, Hong Kong stocks rebounded slightly by 0.51% to close at 24221.54 points.

  Cinda Securities strategist Fan Jituo said that since March, Hong Kong stocks have adjusted significantly. The Hang Seng Index has fallen by more than 20%, while A-shares are significantly stronger than Hong Kong stocks, and the Shanghai Composite Index is not much different from its February high.

The very important reason behind this is the difference in investor structure and sector composition. The financial, consumer and information technology industries account for a higher proportion in the Hang Seng Index, and they are all sectors that are experiencing a decline this year, while the Shanghai Composite Index includes upstream manufacturing industries such as industry and materials. The boom has increased significantly.

  On the evening of September 21, CKH Holdings (00001.HK) issued an announcement stating that it would repurchase 184,000 shares on September 21, 2021, at a cost of 9,455,200 Hong Kong dollars, with an average repurchase price of approximately 51.39 Hong Kong dollars.

The cumulative number of shares repurchased by CKH Holdings in the past three months was 11.972 million shares, accounting for 0.31% of the company's issued share capital.

At the end of June, the stock price of CKH Holdings exceeded HK$60 at one time, but it barely stayed above HK$50 on September 21. In other words, the operation method adopted by the management of CKH Holdings during the substantial adjustment process of CKH Holdings’ stock price following the Hang Seng Index. In fact, it means "the more you fall, the more you buy."

  Taking advantage of the downturn in stock prices, Tencent Holdings, the first component of the Hang Seng Index, was also repurchased.

On September 21, Tencent Holdings announced that it will repurchase 230,000 shares on September 21, 2021, at a cost of 103 million Hong Kong dollars, and the average repurchase price is approximately 448.68 Hong Kong dollars.

Tencent Holdings has repurchased a total of 4,241,800 shares in the past three months, accounting for 0.04% of the company's issued share capital.

Although Tencent Holdings has made significant adjustments following the index, under the background that the Hang Seng Index hit a new low of this round of adjustments, it has not fallen below the low point of this round of adjustment set on August 20 (HK$412.2).

  Regarding the recent decline in financial stocks, Fan Jituo believes that financial stocks have entered the value range from the perspective of absolute returns. At the end of the year, attention can be paid to the increase in relative returns. Especially when incremental funds come in, the market may appear similar to the 2014 first. The situation in the fourth quarter.

Haitong Securities strategic analyst Xun Yugen said that on September 16th and 17th, Zhongshan and Zhuhai solicited opinions from the society on lowering the personal income tax and land value-added tax rates on the transfer of second-hand houses.

If there are positive changes in the policy, the underestimated real estate industry is expected to have repair opportunities, which will drive the banking sector.

Historically, the probability of bank real estate repairs in the fourth quarter was relatively high.

  A year ago, when the Hong Kong stock market was also in a downturn, the Li Ka-shing Foundation purchased Cheung Kong at an average price of approximately HK$38 per share on September 24, September 25, September 28, and September 29, 2020. The group (01113.HK) has a total of 771,500 shares, involving an amount of about 29.38 million Hong Kong dollars. In August 2020, it cost nearly 600 million Hong Kong dollars to buy.

Beginning in October 2020, Cheung Kong Group followed the Hang Seng Index to start a full-scale rise, and in January 2021 ushered in the "Hong Kong stock era" again.

  A well-known public offering person in South China told a reporter from China Business News that, regarding high-quality blue-chip stock targets in the Hong Kong stock market, "our fund manager's attitude is:'The more you fall, the more you buy.'"

Keywords: