The Hang Seng Index opened 0.17% higher, while the Hang Seng Tech Index rose by 0.34%. In market movements, the new energy sector showed strength, with CATL gaining over 1%. The AI industry chain also performed strongly, with Cambridge Technology rising more than 7%.
Regarding the future outlook for Hong Kong stocks, Guoyuan International believes that after a prolonged decline, valuations in the Hong Kong tech sector have been compressed to extreme levels. Stock prices of many companies are now significantly below their intrinsic value, and market sentiment remains deeply pessimistic. The firm expects that profit expectations for the internet sector have already undergone some adjustments. Moving forward, with policy catalysts and support from new industry trends, this sector is anticipated to become a key driver for upward valuation adjustments.
Huatai Securities noted that last week, tail risks from geopolitical conflicts decreased substantially, leading to some recovery in market sentiment. The initial rebound phase saw rapid trading activity, primarily driven by short-term speculation. Attention is focused on sectors that experienced steep declines earlier and were heavily impacted by sentiment and expectations of Federal Reserve tightening, such as technology and Hong Kong-based financial stocks. However, sustained index-level reversal trading after the rebound may face challenges, as geopolitical tensions could continue to cause fluctuations.
Market focus lies on whether a sustained rally, similar to the one following tariff disputes last April, can be achieved. However, current conditions differ in two key aspects: first, replicating last year's liquidity environment—characterized by significant declines in global financial conditions indicators like the US dollar and low positioning of southbound funds in Hong Kong stocks—is difficult; second, last year's tariff disputes mainly affected risk appetite while exports remained resilient, but if upstream "hard shortages" persist medium to long term, fundamentals could inevitably be impacted. Therefore, for the medium term, it is advised to continue allocating to low-volatility dividend stocks and adjust portfolio structures in response to changes in domestic and external demand.
GF Securities released a report expressing optimism about rebound opportunities in Hong Kong stocks during the second quarter, particularly in April and May, though it emphasized this is not a reversal scenario. This view is based on three negative factors being largely priced in: first, full-year results have been disclosed, with uncertainties around earnings, share buybacks, and capital expenditures already digested; second, the peak in share lock-up expiries in March has ended, with the scale of expiries declining in the second quarter, potentially providing a chance for negative sentiment to clear; third, overseas liquidity pressures have eased, with expectations of a Trump visit to China possibly boosting risk appetite. While expectations for interest rate cuts have fallen to zero, once geopolitical and inflation disturbances are absorbed, there is room for valuation recovery.
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