Family faces the river: new productive forces quietly reflected in Hong Kong stocks without following the Hang Seng Index

The new productive force is the productivity where "technological innovation plays a leading role". CITIC SEC released a research report stating that at the collective study of the Central Political Bureau in January 2024 and the Political Bureau meeting in February, it was mentioned to accelerate the development of new productive forces. The concept of new productive forces was first proposed by the general secretary during his investigation in Heilongjiang in September 2023. From an industrial perspective, new productive forces cover the majority of strategic emerging industries and future industries. According to People's Daily, new productive forces, relative to traditional productive forces, refer to the large-scale use of new technologies such as big data, artificial intelligence, the internet, cloud computing, combined with high-quality labor, modern finance, and data information to generate new industries, biomedical engineering in Shenzhen, new technologies, new products, and new formats. From a policy perspective, policies related to fostering new productive forces may focus on three aspects: technological self-improvement, digital economy, and green transformation. It is suggested that attention should be paid to technology manufacturing theme investment opportunities under the catalysis of policies related to new productive forces, including semiconductor equipment, industrial automation, new materials, AI, computing power, data elements, hydrogen energy, nuclear energy, energy storage, power grid equipment, electric power IT, etc. Recently, companies that have seen good increases (or high rebound intensity) in their Hong Kong stocks are mostly core value technology companies (especially those in the core industrial system). Recently listed companies such as humanoid Siasun Robot & Automation representing UBTECH ROBOTICS (09880); AI Artificial Intelligence representing FOURTH PARADIGM (06682) have been favored by the southbound capital of the Stock Connect program, indicating that mainland funds have advanced understanding of policies. It is worth mentioning stable and robust core industrial assets. For example, Zhuzhou CRRC Times Electric (03898) is one of them. HSBC previously stated in a report that Zhuzhou CRRC Times Electric's stock price fell by 20% in the past three months mainly due to market concerns about the excessive supply of EMUs and slow tendering, but it believes that the strong demand reflected during the Spring Festival and confidence in Zhuzhou CRRC Times Electric's technological advantages. The next peak travel season is the Labor Day holiday, and it is estimated that the strong travel demand during the Spring Festival will drive this year's EMU maintenance orders and tenders ahead for CRRC Corporation and Zhuzhou CRRC Times Electric, representing the next catalyst. In fact, everyone knows that the Spring Festival travel data is bustling. Why wait until the data is announced before international investment banks come out singing praises? And the obvious continuous decline in stock prices earlier on is mainly due to the exit of many irrational capital from mid to long-term positions. After years of decline, semiconductor companies with a PE multiple of less than 10 have seen a liquidity discount only in Hong Kong stocks. But major investment banks and institutions hope the stock prices of high-quality companies are lower so they have a chance to bottom out successfully. In terms of power grid equipment, there are core companies like WASION HOLDINGS (03393) in the Hong Kong market, with very low valuations given by the market previously. This company not only produces electric meters but also involves chips in the power grid. Last year, its subsidiary's communication chip business grew rapidly, with Wuhan Zhonghui achieving revenue of 460 million yuan, a profit of 135 million yuan (double the growth), accounting for 25.75% of the company's net profit attributable to the parent company. However, Hong Kong stocks only gave a few times of PE. Of note is the significantly advanced overseas business advantage of the company. Currently, the company has three factories overseas, namely in Mexico, Brazil, and Tanzania in Africa. The largest contribution comes from the factory in Mexico, with a full production capacity of approximately 1.2 billion yuan. Guoyuan (HK) Research pointed out that the Mexican market has entered a 5-year smart meter replacement cycle, with strong and sustainable demand, and the company will further expand its business to surrounding areas in Mexico, with the future growth of overseas business expected. Musk said last year, that by 2024, the US will not lack computing power, but rather electricity... Imagine the possibilities. For instance, companies such as FIRST TRACTOR (00038), which have been quietly hidden in the Hong Kong stock market for many years, if it weren't for the recent requirements of the State-owned Assets Supervision and Administration Commission to conduct market value assessments on central SOEs, their stock prices would probably remain unknown. The major shareholder of FIRST TRACTOR is China Machinery Industry Group Co., Ltd., a state-owned enterprise in the true sense. The company is the leading domestic tractor enterprise, benefiting from policies related to national food security, agricultural machinery safety, etc., combined with product upgrades, the market share of tractors is expected to further increase. At the same time, the company continues to enhance its product competitiveness through active R&D to expand its export space. The company achieved revenue and net profit attributable to the parent company exceeding expectations in 2023 in a downturn in the industry, mainly due to consecutive years of significant export growth. With Hong Kong stocks gradually recovering their vitality in 2024, companies that grasp the new productive forces may thrive this spring. Disclaimer: This article is for discussion purposes only and should not be considered as investment advice. The author does not hold any of the mentioned Hong Kong stocks. The stock market involves risks, and investments should be made cautiously.