HK - Market Strategy 03 (Dec 17 - Dec 25)

[winston]

<News Alert> China/HK equity strategy: near-term caution warranted amid geopolitical tension and HKD weakness

US’ strikes on Iran triggered concerns on the block of Strait of Hormuz

A negative development on global risk assets, including HK stocks, due to potential stronger USD and a possible brief return of US exceptionalism trade

HKD touching weaker end of trading band may also raise the prospect of HKMA intervention and a subsequent rebound in HIBOR

Stay cautious on HK stocks in the near term

How to position. Potential corrections in 3Q25 – possibly triggered by weaker macro condition, ongoing US-China tension and profit taking - could present opportunities for dip buying.

We prefer HK-listed shares over A-shares due to its higher concentration of tech stocks, more attractive valuations, and greater sensitivity to foreign investment flows.

Our key investment themes are
1) tech stocks,
2) resilient industry bellwethers, and
3) high-yield stocks with stable earnings.

Source: DBS

https://www.dbs.com/insightsdirect/coun ... ecid=26128

[winston]

Standard Chartered and UBS bullish on Hong Kong, China stocks on policy support, earnings

Standard Chartered is overweight on allocations to Chinese equities, while UBS expects the premium between A and H shares to narrow further

Mainland Chinese and Hong Kong stocks, will rise in the second half as Beijing’s policy support is expected to revive earnings growth, according to Standard Chartered and UBS Group.

Standard Chartered was overweight on allocations to Chinese equities due to the de-escalation of tariff tensions with the US following the signing of a framework agreement last week, the UK bank said in a report on the second-half outlook on Monday.

The bank said it preferred Chinese offshore stocks to onshore ones because many of them were growth companies that had strong upside potential and their valuations were lower than their peers in the US and Europe.

Source: SCMP

https://www.scmp.com/business/china-bus ... pe=section

[winston]

Chinese money fires up Hong Kong shares

Institutional money is gushing in too, causing the gap in dual-listed stocks to compress, although China’s capital controls ensure some variance remains

A record US$90 billion of cash from the mainland has driven a stellar 21 per cent rally in Hong Kong stocks in the first half of 2025.

Mainland investors via Stock Connect now contribute to 50 per cent of Hong Kong’s daily stock turnover, up from around 30 per cent at the beginning of 2024.

High-dividend bank shares in Hong Kong have attracted yield-focused investors such as Ping An Insurance and China Life, as long-term treasury yields flirt with record lows.

Source: Reuters

https://www.businesstimes.com.sg/compan ... ong-shares

[winston]

<Research>CICC: Investors Shall Moderately Reduce Positions in HK Stocks in ST, Keep 'Bullets' for Future Opportunities

The macro environment for industry rotation in Hong Kong stock market is characterized by 'abundant capital + asset scarcity = index volatility + extreme structure', CICC recently released a research report saying.

The reason why the market is characterized by index oscillations but with active market structure was due to the lack of overall economic returns, the existence of structural highlights and the strong abundance of capital.

At the industry level, the above analysis shows that new consumption and innovative drug unite was also very evident.

In this context, tightened short-term liquidity margin, tariff negotiation variables, weakening data and delayed policy launch may cause market volatility.

Therefore, CICC suggested investors can
1) moderately reduce positions in the short term,
2) switch to stable dividends,
3) wait for future opportunities for AI internet, which is expected to have significantly slowed since the beginning of the year.

If significant fluctuations occur, investors can instead intervene more aggressively to buy back quality assets at a lower cost, but only if they can keep the “bullets”.

Source: AASTOCKS Financial News

http://www.aastocks.com/en/stocks/news/ ... -news/AAFN