HK Stock Market Move | Infrastructure stocks lead the way in gains, official guidelines for market value management released, and construction central enterprises may see a rise in valuation.

Infrastructure stocks led the gains. As of the time of writing, China Railway Construction Corporation (01186) rose by 5.67% to HK$5.59, China Railway (00390) rose by 4.18% to HK$3.99, CHINA COMM CONS (01800) rose by 3.31% to HK$5.31, and Metallurgical Corporation of China (01618) rose by 2.45% to HK$1.67. On November 15th, the China Securities Regulatory Commission issued the "Regulatory Guidance No. 10 for Listed Companies - Market Value Management", requiring listed companies to improve company quality, enhance operational efficiency and profitability based on the actual situation, and lawfully and compliantly use mergers and acquisitions, equity incentives, employee stock ownership plans, cash dividends, share repurchases, and other methods to promote the return of investment value of listed companies. It also made specific requirements for companies listed as key index components to establish market value management systems and disclose valuation improvement plans for long-term companies trading below net assets. Guotou Securities believes that in the first three quarters of 2024, due to tight pressure on local government debt and insufficient arrival of infrastructure funds, the investment growth rate in the industry slowed down, putting pressure on most construction companies. With the acceleration of the issuance of special bonds and the issuance of special national bonds, the operating cash flow of some central enterprises in Q3 improved compared to the previous quarter. Currently, the quotas for local government special bonds in 2024 have been issued, and with the effectiveness of special bonds, the continuous progress of local government debt conversion, and the implementation of market value management guidance for central enterprises, construction central enterprises are expected to see improvements in fundamentals and valuation. It is optimistic about the future intrinsic value enhancement and market performance of construction central enterprises.