＜Research＞Haitong Int'l: Positive Changes in Fundamentals, Capital, Sentiment in 2H, which Shore up H-shrs Continuously

　　Haitong International released a research report stating that the performance of the world's major stock indexes was mixed in June, while H- and A-shares headed south. Looking ahead to 2H24, positive changes were expected in fundamentals, capital and sentiment, shoring up H-shares continuously. In terms of fundamentals, the turning point was expected to be confirmed with the ongoing promotion of policies, while macroeconomic growth was envisioned to rebound and corporate earnings to recover.

　　In terms of capital, there is still room for inflows of stable foreign capital with a longer-term allocation. The improvement in overseas liquidity in 2H24 may entice long-term foreign capital to return to H-shares. As to sentiment, the current domestic market sentiment is at a historical low. The Third Plenary Session of the 20th CPC Central Committee, to be held in July, has the focus on developing new quality productivity. Relevant reform policies may raise market risk appetite and promote a rebound in the A- and H-shares.

　　The report cited Haitong macroeconomic forecast that the real GDP growth rate in China was projected at around 5-5.5% this year. At the micro level, the overall net profit of H-shares last year lifted by 2.6% YoY, which was a positive turnaround from 1H23. The trend of improving profitability in H-shares is gradually becoming evident. It was assumed that corporate profits will continue to revive with policy support, expanding the upside potential of H-shares.