On May 22, the Hang Seng Index opened 1.01% higher, while the Hang Seng Tech Index rose by 1.57%. In the market, the semiconductor sector advanced, with HUA HONG SEMI and SMIC both gaining over 3%. Memory chip stocks were strong, with Montage Technology rising nearly 5% and GigaDevice increasing over 4%.
Regarding the outlook for the Hong Kong stock market, China Merchants Securities believes the probability of the market fluctuating upward remains high. Current valuations in Hong Kong are still at relatively low levels compared to other major markets, providing a good safety margin. Although external liquidity constraints persist—with resilient U.S. inflation and rising U.S. bond yields continuing to pressure growth stock valuations—the Hong Kong market has already largely reflected some pessimistic expectations over the past period, leaving relatively limited room for further significant declines.
Huatai Securities noted that the Hong Kong market still faces two major external challenges. On one hand, the impact of oil supply shocks is nearing a critical point of concentrated release. On the other hand, inflation expectations are pushing up global bond yields, and monetary policy has limited effectiveness in addressing supply shocks. Internally, southbound capital still faces pressure to reduce positions. The institution stated that the market is currently bottoming out, but a sustained index reversal requires both positioning adjustments and catalysts, such as consumption and AI developments. It is recommended to allocate along two main lines: cash flow certainty and industry trend certainty. For cash flow, focus on holding resource products like oil and gas, coal, aluminum, and dividend low-volatility stocks. For the industry side, the AI chain remains a mid-term theme, but due to increased short-term overseas volatility, it may be prudent to take some profits in the technology sector where gains are substantial and wait for better accumulation opportunities.
Guotai Junan Securities believes that short-term risk factors like rising interest rates bring negative pricing disturbances, but the mid-term focus remains on the growth trend of the AI industry. The key to a breakthrough in the Hong Kong market in the next stage lies in confirming a fundamental inflection point, with Q1 earnings reports from internet companies solidifying the narrative of a fundamental recovery. Structurally, it is important to value the defensive role of Hong Kong dividend stocks and gradually increase attention on Hong Kong technology stocks and resilient external demand/overseas expansion chains.
Industrial Securities argues that for the Hong Kong market to form a truly sustainable index rally, it still requires more conditions to align. Over the past period, adjustments in the Hong Kong market, especially in the Hang Seng Tech Index, have mainly been due to downward revisions in earnings expectations. In the index composition of Hong Kong stocks, sectors like internet, consumption, finance, and automotive have significant weight, and their performance is closely tied to China's credit cycle, domestic demand recovery, and consumer confidence. There may be an opportunity for a beta-driven market rally in Hong Kong stocks in the second half of the year. As investors further recognize the stability of the Chinese economy and expectations for Fed rate cuts recalibrate around mid-year following potential policy changes, it could catalyze a new round of upward momentum for Hong Kong indices.
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