[ET Net News Agency, 09 October 2024] On the second day of A-share market resumption
after the National Day, the Shanghai and Shenzhen stock markets plunged by more than half.
The Hang Seng Index rebounded weakly and once plunged 736 points, reaching a low of 20,190
points. The Hang Seng Index closed at 20,635 in the half-day report, down 291 points or
1.4%, and the main board turnover exceeded HKD 241.8 billion.
The Hang Seng China Enterprises Index reported at 7,373, down 110 points or 1.5%. The
Hang Seng Tech Index reported at 4,655, down 40 points or 0.9%.

"Hang Seng Index may reach 19,000 points for the worst case scenario"

Tensions in the Middle East are expected to ease, and external US stocks are doing well,
but Hong Kong stocks are still volatile. After the Hang Seng Index plunged by more than
2,100 points yesterday (8th), it rebounded by nearly 500 points early today.
Unfortunately, there was a lack of support from high levels, and the decline in A-shares
expanded, dragging the Hang Seng Index back down. Nip Chun Pong, the Chief Strategist at
Blackwell Global Securities, told ET Net News Agency that the market had too high
expectations for the National Development and Reform Commission's press conference.
Yesterday's press conference did not mention a word about the trillion-dollar
revitalization of the economy. The expectations were shattered, so there was an obvious
profit-taking and this caused selling pressure yesterday. The Hang Seng Index has been
rising sharply since 24 September, driven by national policies, and has been rising
rapidly, breaking through multiple thousand-point marks in a row. Until the market close
on 7 October, the Hang Seng Index had risen by more than 4,000 points. Yesterday, it fell
by more than 2,000 points and retreated to around 20,900. If it fails to maintain this
level today, the market outlook will have the opportunity to test the psychological mark
of 20,000 points. In the worst case, it may reach 19,000 points.

"The low P/E ratio of domestic insurance stocks can be considered"

NCI (01336) announced that it expects net profit for the first three quarters ending on
30 September to be RMB 18.607 billion to 20.515 billion , a year-on-year increase of 95%
to 1.15 times. The group pointed out that in the first three quarters, it increased
investment in equity assets, increased the allocation ratio of equity assets, and at the
same time strengthened quality management on the insurance liability side and optimized
the business structure. The recent rebound in the capital market has led to a significant
year-on-year increase in investment income and net profit in the first three quarters. Nip
Chun Pong pointed out that since A-shares only started to rise in late September, relying
solely on the rise of A-shares to increase the value of capital and boost profits in the
third quarter is relatively low. He believes that Mainland China's consumer sentiment
increased in the third quarter, and increased investment in financial products is the main
reason.
NCI's recent stock price has risen from the closing price of HKD 17 on 23 September to a
maximum of HKD 35.6 on 7 October, an increase of more than 100%. Nip Chun Pong believes
that this is mainly due to the lagging stock prices of insurance stocks. Taking advantage
of this wave of central government support policies, the stock prices were catching up. In
addition, the discount of NCI H shares to A shares is as high as 50%, which is also a
reason to attract investors.
Although the domestic insurance sector has followed the market's correction in the past
two days, it has risen a lot recently, Nip Chun Pong is still optimistic about the
industry's prospects. He pointed out that the current price-to-earnings ratio of the
industry is less than ten times on average, which is on the low side and can be
considered. In addition to the lagging stock prices, the central government has earlier
developed stabilization funds and swap facilities for securities funds and insurance
companies. The initial fund size is expected to be RMB 500 billion, and it has been stated
that the funds may be increased by an additional RMB 500 billion. However, since the
market is correcting, investors can consider buying after it stabilizes. However, compared
to NCI, Nip Chun Pong is more optimistic about China Life (02628), mainly because its H
stock price has a larger discount than A shares, as high as 67%. As long as the stock
price falls below HKD 15, it will become attractive for investment.