Hong Kong Stock Market Review: Taking the Lead

As we enter the last trading day of the first half of the year, A-share and H-share stocks have rebounded, most likely driven by protective measures. Both markets have erased most of their gains for the year, and any slight misstep could trigger another confidence crisis. Previously, Guo Xin subscribed to the Hang Seng Connect state-owned enterprise dividend index, which basically pointed the market in a direction. Today, some high-yield stocks have hit new highs. In response, Ping An of China also followed suit, reducing its holdings of Industrial and Commercial Bank of China H-shares last year, and recently began increasing its holdings again, currently holding 13%. The company reduced its holdings of HSBC in May, but remains the second largest shareholder of HSBC. Of course, the sudden rise in high-yield stocks seems a bit unexpected, indicating that some people are rushing to lock in profits ahead of positive news announcements over the weekend. Mainland China has relaxed the tax-free shopping limit for residents traveling to Hong Kong and Macau to 12,000 yuan, lower than the market's expected 30,000 yuan, but still a supportive gesture, indicating the possibility of dividend tax reductions. Furthermore, as mentioned yesterday regarding consumption, Nike's stock plummeted after its earnings report, with the company indicating that the outlook may not be very optimistic, especially in the Chinese market. This has undoubtedly put pressure on Shenzhou International, which accounts for 30% of its revenue. However, looking at other clients such as Anta and Li-Ning, domestic brands, as well as Adidas, Uniqlo, and Puma, their orders for this year are still growing, offsetting this negative impact. Interestingly, Crystal International's order growth this year is mainly driven by Adidas and Lululemon. It seems that Adidas has successfully destocked in China, while Lululemon, despite facing market saturation and intensified competition in North America leading to slowed growth and a significant drop in stock price, still serves as a source of order growth for the aforementioned companies. Crystal International's stock price has risen by 40% this year. On one hand, this is due to replicating Shenzhou's development model, with 80% of its production capacity moved to Southeast Asia, higher than Shenzhou. It is also developing upstream fabrics to create an integrated advantage. On the other hand, the company continues to increase its dividend payout ratio, from 30% in 2021 to 40% in 2023, and may reach 50% in the following year. Many small and medium-sized companies in Hong Kong have seen significant increases in their stock prices this year, largely due to their consistently high dividend payout ratios. Especially since many companies hold large amounts of cash, a feat that many A-share companies may not be able to achieve