A pedestrian walks past an electronic board showing numbers for the Hang Seng Index in Hong Kong on Sept 27, 2022. (PETER PARKS / AFP)
Internet trading broker Magpie Securities said it expects Chinese mainland A-shares and Hong Kong shares (excluding mainland stocks traded in the city) to have better investment prospects next year because of their attractive valuations, and that a relaxation of COVID-19 curbs could be the catalyst for a stock market rebound.
According to Magpie Securities’ figures, MSCI Hong Kong is trading at a P/E ratio of 14.7 times, which is lower than the 5-year average of 17.8 times. Earnings growth for 2023 is predicted to register a 28.3 percent surge because of the lower base of comparison
“For Hong Kong equities, excluding non-Chinese stocks, their valuation is quite attractive whereas price-to-earnings ratio is 14 times. It is more attractive than the US market because of the valuation, and the catalyst would be the relaxation of COVID measures,” predicted Anthony Tran, a senior strategist at Magpie Securities.
According to Magpie Securities’ figures, MSCI Hong Kong is trading at a P/E ratio of 14.7 times, which is lower than the 5-year average of 17.8 times. Earnings growth for 2023 is predicted to register a 28.3 percent surge because of the lower base of comparison.
MSCI China is trading at 10.7 times P/E ratio which is lower than 5-year average of 15.5 times. Earnings growth next year is forecast to expand at a rate of 14.9 percent.
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On the other hand, MSCI USA is trading at 29.1 times P/E ratio which is only slightly lower than the 5-year average of 31.1 times, and earnings growth is tipped to be 4.7 percent next year.
In this undated file photo, a display shows the Shanghai Composite Index performance on a rainy day in Shanghai. (WANG GANG / FOR CHINA DAILY)
The mainland has stronger economic growth as compared to the United States and that is why it makes more sense for people to overweight mainland equities for the time being … And because of lower inflation, the mainland has much potential to do some expansionary monetary policy than the US market.
Anthony Tran, senior strategist at Magpie Securities
“The mainland has stronger economic growth as compared to the United States and that is why it makes more sense for people to overweight mainland equities for the time being,” Tran added. “And because of lower inflation, the mainland has much potential to do some expansionary monetary policy than the US market.”
“I believe that inflation will remain stubborn in the global economies and that interest rates will rise further than what is currently predicted by the central banks, and they will stay higher and last longer,” Magpie Securities CEO Richard Abrahams said.
The online trading app on Tuesday announced it will offer 2.88 percent per annum interest to all clients on their stock trading accounts’ unvested cash balance (In Hong Kong and US dollars) in Hong Kong – the first product of its kind among internet brokerages in Hong Kong.
“The new product allows our clients to be more patient and selective in their investment decisions under market fluctuations,” Abrahams added.
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The CEO said that since the launch of the interest rate program, cash deposits have increased 75 percent and the amount of stock positions held within Magpie Invest App’s accounts has gone up 14 percent.
Since the launch of the Magpie Invest App last year, it has recorded over 68,000 installations with over 10,000 clients signed up.
Magpie Securities is a licensed securities firm based in Hong Kong, wholly owned by NASDAQ-listed global fintech company MICT Inc.