Huatai Securities : Avant et après le Nouvel An chinois, il pourrait encore y avoir de nombreux catalyseurs dans les secteurs de la technologie et de la consommation. Recommandation : une allocation équilibrée et conserver ses actions pendant les fêtes.

Huatai Securities note indicates that Hong Kong stocks last week fluctuated alongside global risk assets. The global software sector correction, controversies over subsidies for tech giants entering Hong Kong stocks, the rebound of the US dollar, and residual effects in commodity markets all contributed to increased daily and intraday volatility. However, liquidity remains relatively ample, with foreign capital and southbound inflows continuing to pour significantly into the Hong Kong market, driving the strong performance of traditional sectors such as agriculture, forestry, animal husbandry, fishery, food and beverages, and transportation. Looking ahead, the peak earnings period for US tech stocks is nearing its end, precious metal volatility is expected to decline, and there may still be catalysts from technology and consumer sectors around the Spring Festival. We recommend balanced allocation and holding stocks through the holiday, with a focus on semiconductor, niche consumption with continued low-level recovery, real estate chain, and innovative pharmaceuticals α after negative factors are largely priced in. Our medium-term allocation view remains unchanged: after stabilization, continue to accumulate resource stocks, overweight insurance and Hong Kong local stocks.

全文如下

Huatai | Hong Kong Stock Strategy: Technology and Consumer Sectors May Receive New Catalysts During Holiday

Hong Kong stocks last week fluctuated alongside global risk assets. The global software sector correction, controversies over subsidies for tech giants entering Hong Kong stocks, the rebound of the US dollar, and residual effects in commodity markets all contributed to increased daily and intraday volatility. However, liquidity remains relatively ample, with foreign capital and southbound inflows continuing to pour significantly into the Hong Kong market, driving the strong performance of traditional sectors such as agriculture, forestry, animal husbandry, fishery, food and beverages, and transportation. Looking ahead, the peak earnings period for US tech stocks is nearing its end, precious metal volatility is expected to decline, and there may still be catalysts from technology and consumer sectors around the Spring Festival. We recommend balanced allocation and holding stocks through the holiday, with a focus on semiconductor, niche consumption with continued low-level recovery, real estate chain, and innovative pharmaceuticals α after negative factors are largely priced in. Our medium-term allocation view remains unchanged: after stabilization, continue to accumulate resource stocks, overweight insurance and Hong Kong local stocks.

Core Views

Fundamentals: Non-financial profit expectations continue to be revised upward, with pharmaceuticals and real estate leading the upward revisions

Consensus expectations: Overall, non-financial Bloomberg consensus earnings/revenue (hereafter referred to as earnings/revenue expectations) over the next 12 months have been revised upward by 0.6%/0.1% over the past 4 weeks, and by 0.1%/0.1% over the past week. Sector-wise, the sectors with the largest upward revisions in earnings expectations over the past 4 weeks and past week include semiconductors (4.8%/1.5%), pharmaceuticals (1.9%/1.2%), and real estate (0.7%/0.9%). Among these, revenue expectations for pharmaceuticals and real estate have also been revised upward with significant increases. Last week’s top-performing sectors in excess returns saw earnings expectations revised upward by 1.0%/0.4% over the past 4 weeks and past week, respectively, while food and beverage sectors saw downward revisions of 0.4%/1.1%.

Liquidity: Foreign capital maintains inflows, southbound inflows accelerate

As of Wednesday, according to EPFR data, foreign net inflow into Hong Kong stocks was $1.88 billion (vs. net inflow of $2.80 billion the previous week), with active foreign investment net inflow at $420 million and passive foreign investment net inflow at $1.47 billion, both remaining high. Southbound inflows last week totaled HKD 56 billion, a significant increase from HKD 2.7 billion the previous week. Leading sectors in net inflow included media, real estate, non-bank financials, transportation, and banking, while sectors such as non-ferrous metals, electronics, and pharmaceuticals experienced net outflows. Regarding short positions, our latest calculation shows the Hong Kong stock short interest/trading ratio at 2.3%/12%, up 0.11/2.5 percentage points from the previous period, indicating that short sellers are increasing after a brief short squeeze.

Market sentiment: Still in optimistic range, no clear signs of position adjustments after recent market correction

As of Friday, the Hong Kong stock sentiment index stood at 63.8, remaining in the optimistic range. Contributing factors include continued net inflows from southbound funds, increased buying intensity, and higher AH premium scores (rising from 23/17/56 to 63/56/68), returning to optimistic levels. Derivative indicators show a slight unwinding of the Hang Seng Index’s premium/discount, and the put-call ratio for options has also slowed in upward movement. Sentiment indicators reflect actual trading and positioning, which do not always align perfectly with market trends. Despite recent large fluctuations, market sentiment remains optimistic, possibly indicating limited position adjustments during volatility. Since the release of our timing strategy in September 2024, the off-sample pure long strategy has achieved an annualized excess return of 9.8%, and the long-short strategy 19.8%, demonstrating effective timing.

Regarding Hong Kong IPOs, based on our previous IPO model, five stocks recently listed that meet the model criteria, with Aixin YuanZhi, Lead Intelligent, and Lankei Technology scoring highly.

Allocation: Post-risk pricing focus on semiconductors, sectors with improving outlook, real estate chain, etc.

In the short term, the AI sector was previously adjusted for three risks: 1) the divergence between Capex and earnings growth of US tech giants, with sustained strong Capex; 2) domestic AI giants increasing subsidy investments to compete for traffic, possibly diverting R&D Capex; 3) revisions to the easing of overseas liquidity expectations. As US tech earnings reports are largely disclosed, domestic giants’ subsidies are implemented, and the easing expectations are nearing their end, focus on hardware sectors like semiconductors with continued earnings improvement. The trend of innovative pharmaceuticals remains strong, though shareholding structures may face pressure, presenting more α opportunities. Sectors with ongoing recovery, such as niche consumption and real estate chain, still have room for improvement. In the medium term, continue overweight resource stocks (moderate accumulation after stabilization), insurance, and Hong Kong local stocks.

Risk warning: Geopolitical fluctuations, policy measures below expectations.

（Source: Yicai）