Are these the best Hong Kong stocks to buy in 2022?
Hong Kong stocks remain undervalued, which could mean attractive entry points for investors. In this article, we look at 10 of the best Hong Kong-listed shares you can consider trading.
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Why should you trade these Hong Kong-listed stocks?
The Hang Seng Index, which tracks the performance of the largest companies listed on the Hong Kong Stock Exchange (HKSE), is down by over 19% in 2022. Analysts believe the lower price presents investors with opportunities to add these 10 stocks to their portfolio.
Previously, we covered the 10 best Chinese stocks to trade in 2022. The distinction between the previous list and this list is that the former included only China-founded companies listed on the HKSE, while this list includes those established and headquartered outside of China.
HSBC Holdings PLC (HKG: 0005)
Although HSBC’s Hong Kong listing has been a relatively steady performer this year, shares are down 8% in the last two months.
The current decline has coincided with the bank’s latest half-year financial results as well as calls by its largest shareholder, Ping An Insurance Group, to restructure the Asia business.
The largest bank in Hong Kong by assets reported that revenue decreased marginally to $25.2 billion in the first half of 2022, primarily due to foreign currency translation impacts and losses on planned business disposals.
Despite the decrease, the company maintained that the revenue outlook for the rest of the year remains positive.
AIA Group Ltd (HKG: 1299)
AIA shares have fallen 9.5% in the last one month and are currently trading at a two-year low.
The stock fell sharply on 14 September, after the US Consumer Price Index for August 2022 came in higher at 0.1% than the expected -0.1%.
The insurance and financial services firm reported its second quarter results on 25 August, where it posted a $3.6 billion year-on-year (YoY) increase in free surplus cash to $20.6 billion.
In light of the ‘strong financial position’, the most valuable Hong Kong-founded company by market capitalisation (market cap) raised interim dividend by 6% YoY to HK$0.403 per share.
Alibaba Group Holding Ltd (HKG: 9988)
The e-commerce giant’s Hong Kong listing is down 24% year-to-date, as the global stock market continued to show signs of sluggishness with inflation rates still elevated.
The stock did experience a huge boost at the end of August 2022, after the Chinese government announced new interest rate cuts and a one trillion-yuan stimulus package.
Alibaba’s revenue for its June-ending quarter came in higher than expected at 205.6 billion yuan ($30.7 billion).
Meanwhile, non-Generally Accepted Accounting Principles (non-GAAP) diluted earnings per American depository share (ADS) decreased 29% YoY to 11.73 yuan ($1.75). Despite the decline, this was higher than Refinitiv analysts’ expectations of 10.39 yuan ($1.51) per ADS.
Hong Kong Exchanges and Clearing Limited (HKG: 0388)
Hong Kong Exchanges and Clearing (HKEX) shares are down by 35% in 2022 and 14% since mid-August.
In the first half of 2022, the market operator signed a new strategic cooperation agreement with Shenzhen Stock Exchange, launched its first metaverse-themed exchange traded fund (ETF), its first blockchain ETF, as well as its first special purpose acquisition company.
HKEX’s first half revenue for 2022 fell 18% YoY to HK$8.94 billion. The board declared an interim dividend of HK$3.45 per share for the period, down 26% YoY.
Tencent Holdings Ltd (HKG: 0700)
Like Alibaba, Tencent’s share price has also dropped tremendously this year.
But despite being down 35% year-to-date, Tencent remains the largest Hong Kong-listed Chinese firm by market cap at nearly 3 trillion yuan ($428 billion).
Results-wise, the technology and entertainment group saw its revenue slip 3% YoY to 134 billion yuan ($19.7 billion) in the second quarter (Q2) of 2022. Analysts surveyed by FactSet had expected Tencent to report a revenue of $19.9 billion.
This was Tencent's first revenue drop from on a YoY basis since going public in 2004.
Sun Hung Kai Properties Limited (HKG: 0016)
Shares of Hong Kong’s largest property developer have rallied 8% since March 2022.
Sun Hung Kai Properties (SHKP), which has a market cap of HK$275 billion, replaced New World Development as Hong Kong’s biggest new home seller in 2021 on the back of a 15% sales growth.
The company posted a lower underlying profit of HK$28.7 billion for the financial year that just concluded in June 2022, as it ‘continued to be affected by a fluctuating pandemic situation’. The group said it ‘will speed up the sales of its projects to increase cash flow’.
Bank of China (Hong Kong) Limited (HKG: 2388)
Bank of China (Hong Kong) (BOCHK) is a subsidiary of the Bank of China (BOC). It was formed in October 2001 from a merger of 12 subsidiaries of BOC and began to list a year later. It is legally separated from BOC.
BOCHK shares are currently trading at a nine-month low of HK$25.70 a share. Shares last traded at this price range in December 2021.
Hong Kong’s second largest bank by assets recently raised its 12-month deposit rate by 30 basis points (bps) to 2.7%. It also raised three- and six-month rates to 1.8% and 2.5% respectively.
China Overseas Land & Investment Ltd. (HKG: 0688)
China Overseas Land & Investment (COLI) shares have surged nearly 25% in the first nine months of 2022, as its market share across major Chinese cities continued to rise.
The real estate conglomerate’s contracted property sales from first-tier cities, including Beijing, Shanghai, Shenzhen and Hong Kong, grew 10.1% in the first half of 2022.
However, profit attributable to equity shareholders of the company fell 19% to 16.74 billion yuan from the same period a year ago.
For the second half of 2022, the group is ‘cautiously optimistic that the real estate market will bottom out and rebound’.
JD.com Inc (HKG: 9618)
JD.com posted better-than-expected results for its second quarter. Shares are up slightly in the last one month.
China’s second largest online retailer recorded a revenue of 267.6 billion yuan ($40 billion) in the second quarter of 2022, an increase of 5.4% from a year ago. This surpassed analysts’ estimates of 262.31 billion yuan ($37.7 billion), based on Institutional Brokers' Estimate System (IBES) data from Refinitiv.
Looking ahead, CEO Xu Lei said that the company will continue to focus on generating strong shareholder returns while maintaining its commitment to long-term investments.
Baidu Inc (HKG: 9888)
The search engine company’s revenue for Q2 2022 came in at 29.65 billion yuan ($4.43 billion), beating Refinitiv analysts’ average estimate of 29.3 billion yuan ($4.25 billion).
This came on the back of Baidu’s non-online marketing revenue, which burgeoned 22% YoY to 6.1 billion yuan ($906 million), driven by the cloud and other AI-powered businesses.
‘Looking into the second half of the year, we are still facing macro uncertainties,’ said Baidu’s chief executive Robin Li. ‘It is hard for us to predict the development of COVID-19 at this stage.’
Baidu’s Hong Kong shares are down 16% year-to-date.
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This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
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