To The Moon

I. Performance and Valuation of Global Equity Indices

Data Source: Bloomberg, Complied by Tiger Brokers

II. Key Market Themes

i. Greater China Tech Stocks Surge—Is It Too Late to Invest?

• Recently, driven by DeepSeek’s impact, the Greater China technology sector has experienced a significant rally. Since February, the Hang Seng Tech Index has surged over 15%, with Alibaba leading the charge, rising nearly 40% in just half a month. Additionally, trading volume in the Hang Seng Tech Index has surged, exceeding HKD 1 trillion in just two weeks. If this trend continues, February’s total trading volume could reach a historic high.

• Despite the rally, Greater China tech stocks remain undervalued. Current data shows that the Hang Seng Tech Index’s P/E ratio $恒生科技指数(HSTECH)$ is around 27, placing it in the 25th percentile of its historical range. Whether in absolute or relative terms, it is still far lower than the Nasdaq $纳斯达克(.IXIC)$ in the U.S. Major international investment banks such as Goldman Sachs $高盛(GS)$ and Morgan Stanley $摩根士丹利(MS)$ have also turned bullish on Greater China stocks. We have two key assessments:

• i. This rally is more rational compared to the surge in late September last year. The current surge is primarily led by top-tier tech firms, which are the direct beneficiaries of DeepSeek. This suggests the rally may have a longer duration.

• ii. AI applications in Greater China appear more promising than breakthroughs in AI hardware. Companies that already have both traffic and strong technological foundations stand to benefit the most. The upcoming Two Sessions (China’s major political meetings) and earnings season will determine the market’s breadth and depth. However, it’s not too late to invest in Greater China tech stocks!

Data Source: Tiger Brokers

ii. U.S. Stock Market Nears New Highs, but Three Major Risks Loom

• Compared to the recent surge in Greater China stocks, the U.S. market seems uncertain. After a volatile start to the month, the S&P 500 and Nasdaq have returned near all-time highs. However, significant risks remain, with three major uncertainties:

• i. Rate Cut Uncertainty: The latest January CPI/PPI figures exceeded expectations again. Retail sales data unexpectedly declined. While inflation remains stubbornly high, the economy appears resilient. Although still under Fed control, the market remains uncertain about the rate cut timeline for 2024.

• ii. Tariff Uncertainty: We continue to emphasize the potential impact of Trump’s tariff policies. This is not just about China—it’s about U.S. protectionism. The recently launched “Reciprocal Tariff” policy may be just the beginning, with further trade tensions on the horizon.

• iii. Political Uncertainty: Elon Musk’s involvement in government decision-making has disrupted U.S. political norms. Heightened partisan conflicts are making the political landscape more unstable.

Data Source: Tiger Brokers

• Adding to this uncertainty is the ongoing earnings season. So far, over 77% of S&P 500 companies have reported Q4 earnings. While Q4 results have generally beaten expectations, only 44% of companies saw post-earnings stock price gains. This suggests investors are cautious—they are not rewarding positive surprises but are punishing disappointments heavily. This reflects a fragile market sentiment, indicating that investors should remain vigilant about potential risks in U.S. equities.

Disclaimer

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