By Mary-Lynn Cesar for Kapitall.
For the last four years, Hong Kong stocks have been on
fire. The MSCI Hong Kong Index had consistently
outperformed the MSCI China Index since early July 2010,
that the Hong Kong index had rallied 160% over the course of the
These days, however, investors are ditching Hong Kong stocks.
Strategists from from BNP Paribas SA, Citigroup Inc., HSBC
Holdings Plc, Standard Chartered Plc, and UBS AG have downgraded
Hong Kong stocks over the last two months. Several financial
services firms, including Credit Suisse Group AG, expect the
developer-and-bank-heavy index to fare
less well this year thanks to the Federal Reserve's stimulus
reduction. Furthermore, according to
, the MSCI Hong Kong Index was trading at a P/E of 16-its
highest level since 2002-at the end of June while the
MSCI China Index was trading at a P/E of 9.8.
So investors are packing up and trading their Hong Kong shares
for Chinese ones. In addition to being cheaper than the city's
offerings, Chinese stocks growing in appeal because of Premier Li
Keqiang's insistence that the nation
its 7.5% growth target
. In June, Keqiang wrote an
, stating, "Despite considerable downward pressure, China's economy
is moving on a steady course. We will continue to make anticipatory
and moderate adjustments when necessary. We are well prepared to
defuse various risks. We are confident that this year's growth
target will be met."
Since banks and financial services companies are moving
from Hong Kong to China, we decided to run a screen on Chinese
stocks that incorporates this shift in investment activity. We
began by screening a group of Chinese stocks with
significant net institutional purchases comprising 5% or
more of share float during the current quarter
. Purchases of this size indicate that institutional
investors-specifically hedge funds and mutual funds-are
bullish towards these stocks and expect them to outperform into the
We then looked for stocks that were
rallying above their 20-day, 50-day, and 200-day simple
moving averages (
as of 12:45 PM EST. This signals that the stocks have strong upward
We were left with three stocks on our list. Do you think hedge
funds on the right track with these rallying Chinese
stocks? Use this list as a starting point for your own
Click on the interactive chart to view data over
1. AutoNavi Holdings Limited
): Provides digital map content and navigation and location-based
solutions in the People's Republic of China (
). Market cap at $1.45B, most recent closing price at $20.88.
The stock is rallying 0.22% above its 20-day SMA, 0.33% above
its 50-day SMA, and 15.52% above its 200-day SMA.
Net institutional purchases in the current quarter at 11.4M
shares, which represents about 39.24% of the company's float of
29.05M shares. The two top holders of the stock are GLG
Partners LP with 2.5 million shares and Eton Park Capital
Management LP with 2.5 million.
2. Bitauto Holdings Limited
): Provides Internet content and marketing services for the
automotive industry in the People's Republic of China. Market cap
at $2.02B, most recent closing price at $46.73.
The stock is currently rallying 7.97% above its 20-day SMA,
18.66% above its 50-day SMA, and 47.50% above its 200-day SMA.
Net institutional purchases in the current quarter at 1.9M
shares, which represents about 8.4% of the company's float of
22.62M shares. The two top holders of the stock are FIL LTD
with 3.5 million shares and Vontobel Asset Management, Inc. with
1.8 million shares.
3. RDA Microelectronics, Inc.
): Designs, develops, and markets radio-frequency and mixed-signal
semiconductors for cellular, broadcast, and connectivity
applications. Market cap at $846.39M, most recent closing price at
The stock is currently rallying 1.39% above its 20-day SMA,
2.73% above its 50-day SMA, and 1.23% above its 200-day SMA.
Net institutional purchases in the current quarter at 1.8M
shares, which represents about 7.92% of the company's float of
22.73M shares. The two top holders of the stock are IDG-Accel China
Growth Fund Associates L.P. with 26.5 million shares and Warburg
Pincus LLC with 17.1 million shares.
(List compiled by Mary-Lynn Cesar. Institutional buying data
sourced from Fidelity. Monthly return data sourced from Zacks
Investment Research. All other data sourced from finviz.)
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