Changes in Hong Kong stocks | Collective decline in steel stocks, institutions say sector valuations have been drastically repaired, and focus on the rate of subsequent contraction on the supply side

The Zhitong Finance App learned that steel stocks fell collectively. As of press release, Chongqing Iron & Steel (01053) fell 4.72% to HK$1.21; Angang Steel (00347) fell 4.06% to HK$1.89; and Ma On Shan Steel (00323) fell 3.64% to HK$2.38.

Guosheng Securities released a research report saying that the implementation of this year's production limit policy has not been effective. On the supply side, we expect the future anti-internal roll policy for steel mills to be effectively translated into operational production pressure as soon as possible, speeding up the return of industry profits. Sector valuations have been drastically restored since the third quarter of last year. Currently, the absolute valuation position has been restored from absolute undervaluation to a moderately low position. There are not many bubbles in valuation. Expectations of a further return in profits have not been factored in, and there is still room for absolute returns.

Cathay Pacific Haitong Securities, on the other hand, said that demand is expected to gradually bottom out; even if the supply side does not consider supply policies, the industry has been losing money for a long time, and market-based supply has begun to clear up. We expect the fundamentals of the steel industry to gradually recover. However, if the supply policy is implemented, the industry's supply shrinks faster, and the upward progress of the industry will unfold faster.