The volatility is more intense than expected, with the turnover of the Hong Kong stock market falling below 300 billion for two consecutive days. The lack of support in the Hong Kong stock market may also be due to the weakening of share buyback efforts, as many companies have slowed down their buyback pace after the stock price increase.
Tencent has not conducted any buybacks for several days, most likely entering a silent period. However, this issue could be resolved through an automatic share buyback plan. Since this has not been done, re-entering a quiet period, especially until the end of the overseas elections, may lead to a continuous reduction in the liquidity of the Hong Kong stock market.
Although A-shares have access to buyback loans, if companies were not willing to buy back shares even when the index was at 2700 points before, it is even less likely now. It is believed that the companies that will eventually implement buybacks are mainly state-owned enterprises. Recently, companies under China Merchants Group collectively announced buyback/hold plans.
Previously, with the expectation of foreign capital returning to the Hong Kong stock market under the policy shift, the opportunity for US stocks to hit new highs has become slim again after the rebound of the US dollar, at least without empirical evidence to support it, especially for large long-term funds. The Hong Kong stock market still relies on domestic sentiment and funds, but with a net inflow of 12 billion yesterday, it has dropped to 8.5 billion today.
Looking at the flows in the past month, Tencent and Meituan have been continuously reduced, indicating that funds are flowing into Alibaba. Currently, the southbound funds hold 9.7% of Tencent and 11% of Meituan, while Alibaba holds about 2.9%. From a proportional perspective, there is still significant room for Alibaba's shareholding ratio to increase.
In addition, China's second-largest packaged drinking water company, CR Beverage, is currently seeking IPO with a median market value of about 32 billion. Referring to the company's 25% net profit growth in the first four months of this year, assuming a 20% growth next year, the corresponding PE ratio is 15-17 times. Nongfu Spring is forecasted to have a PE ratio of about 22 times.
At the same time, cornerstone investors account for half of the IPO, including UBS Asset Management, China Travel Group, China Post Insurance, Indonesian coffee maker PT Kapal Api, as well as newly established hedge funds like Pamalican and Ghisallo.
While there is room for valuation to rise, one of the current market focuses is on shareholder returns, which the company stated in the prospectus that there are currently no policies for. However, with China Post Insurance as a shareholder, there should be stable dividends in the future

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The recent volatility in the Hong Kong stock market has intensified, with turnover falling below HKD 300 billion for two consecutive days. The weakening of share repurchase efforts has led to a lack of support. Tencent has entered a quiet period and has not conducted any repurchases, which may lead to a continued decrease in liquidity. Inflows of funds from the mainland have decreased, with Tencent and Meituan being reduced while Alibaba's shareholding ratio has increased. China Resources Beverage is currently in the process of IPO, with a median market value of approximately HKD 32 billion. Half of the cornerstone investors are expected to receive stable dividends in the future

- The Hong Kong stock market has experienced significant fluctuations, with trading volumes falling below 300 billion for two consecutive days.  
- The decline in stock buybacks, particularly by companies like Tencent, has contributed to this instability, and liquidity may continue to decrease until after overseas elections.  
- Meanwhile, the A-share market is seeing some buyback activity, primarily from state-owned enterprises, while foreign investment in Hong Kong remains uncertain amid a strong US dollar and high US stock prices.

Hong Kong Stock Market Review: More Intense Than Expected