According to Standard Chartered's North Asia Chief Investment Officer, the market situation will continue to be dominated by developments in the Middle East. While the US and Iran are ultimately expected to reach an agreement, based on the assumption that a consensus cannot be reached in the short term, Hong Kong stocks are projected to show a pattern of declining initially before rising during May. He believes that if US-Iran negotiations yield no results in May, the Hang Seng Index could fall to the 24,000 to 25,000 range. Should both sides show willingness to negotiate, the index might reach the 26,000 mark to 26,500 points. If preliminary consensus is achieved, the Hang Seng Index could potentially climb to between 26,800 and 27,500 points.
He indicated that corporate earnings may not serve as the primary catalyst for Hong Kong stocks in the immediate future. Given the market's relatively conservative outlook on earnings, slightly better-than-expected guidance could drive a more positive upward trend for equities. From an investment perspective, he recommended increasing allocation to energy-related high-dividend stocks, which are expected to benefit from elevated oil prices. Alternatively, investors might consider buying into leading electric vehicle stocks on market dips. Although their short-term earnings may still be affected by intense domestic competition, brands that have made significant investments overseas could benefit in the long run from rising electric vehicle demand fueled by high oil prices, with overseas sales likely generating higher profits than domestic ones.
He also advised making long-term strategic allocations to AI chip concepts, including direct investment in leading technology internet companies focused on AI chips. Commenting on the recent strong performance of other Asian markets like South Korea, Japan, and Taiwan, he noted that Asian economies are more reliant on fuel imports. If Middle Eastern issues remain unresolved and key shipping straits stay completely blocked, Asian stock markets would face greater correction pressure. However, China's lower dependence on Middle Eastern crude oil means the impact would be limited. Considering the higher participation of international investors in the Hong Kong market, making it more susceptible to macroeconomic news, he expressed a preference for A-shares over H-shares.
Regarding US stocks, he stated that their robust performance stems not only from artificial intelligence momentum but also from America's relatively lower sensitivity to energy shocks, coupled with generally solid first-quarter earnings results, which continue to attract overweight allocations from investors. Nevertheless, current sector and stock selection requires caution, particularly for crowded tech trades. If earnings fail to impress or capital expenditures disappoint, correction pressure could be significant. Conversely, companies providing strong guidance that successfully quantifies AI benefits and delivers returns are likely to outperform their competitors.
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