STOCKS | CICC Report Highlights Factors Influencing Hong Kong Stocks

On May 21, CICC released a report indicating that uncertainties in overseas markets, coupled with downward revisions in performance expectations for certain Hong Kong stock sectors and underwhelming domestic macroeconomic data from April, have led to a renewed decline in Hong Kong stocks since May 14. According to Jin10, despite these challenges, liquidity in the Hong Kong stock market remains robust, with average daily transactions exceeding 250 billion Hong Kong dollars. On May 15, southbound net inflows reached 24.96 billion Hong Kong dollars, marking the highest level since March 23 this year. The report suggests that the MSCI quarterly rebalancing at the end of May could bring additional funds to Hong Kong stocks, and ongoing Sino-U.S. trade negotiations may support short-term valuation expansion. However, starting in June, attention should be paid to the pressure on liquidity in the secondary market due to stock unlocks. CICC recommends focusing on sectors such as technology, where performance expectations have been fully adjusted, including internet, semiconductors, and robotics; consumer sectors with bottomed-out fundamentals, low valuations, and high dividends; and energy, telecommunications, and utilities, which may benefit from the spread of dividend trading in Hong Kong stocks.