CITIC Securities: Mid term trading window for Hong Kong stocks opens for adjustment, full growth sector hopes to become core mainline

On December 19th, CITIC Securities Research Institute released its latest research report stating that Hong Kong stocks have entered their last mid year trading window of the year. After experiencing a unilateral rise in September, Hong Kong stocks have been subject to fluctuating adjustments due to overseas macro expectations since October. Currently, the AH and other two markets have simultaneously completed mid-term adjustments, and some high-quality Hong Kong stock assets have returned to the high cost-effectiveness range. Coupled with the resonance effect of continuous allocation of Beishui, recovery of profit expectations, and improvement of year-end macro expectations, Hong Kong stocks are entering a period of trading opportunities that cannot be ignored.

From a macro cyclical perspective, the research report predicts that the current Hong Kong stock market is in the middle of a bull market. For the growth sector that has undergone deep adjustments due to market style changes in the early stage, the research report believes that with the recovery of market sentiment and the disappearance of macro level uncertainty, this sector is expected to become the core mainline leading the market upward with high profit elasticity.

Further analysis in the research report reveals that multiple core factors have jointly contributed to the opening of the mid-term trading window for Hong Kong stocks. Firstly, the current adjustment of Hong Kong stocks has significantly increased the safety margin, leaving ample room for a new round of rebound; Secondly, southbound funds continue to maintain a net inflow trend, and are expected to form a resonance pattern of internal and external liquidity with the expected recovery of overseas liquidity in the future; Thirdly, in recent times, the domestic macro fundamentals have shown an improving trend, with inflation data steadily recovering and significant marginal improvement on the export side. Previously, the valuation recovery of Hong Kong stocks was concentrated in the prosperous sector, but it is expected to gradually spread to a wider range of areas with the improvement of macro fundamentals in the future; Fourthly, the new version of the US National Security Strategy does not place China at the forefront of its strategy, and it is expected that the intensity of the confrontation between China and the United States will decrease. Coupled with the continued increase in domestic demand promotion policies, it will form a positive catalyst for the Hong Kong stock market.

Regarding the growth style layout of Hong Kong stocks, the research report mentions three types of related ETF products for reference: firstly, the Hang Seng Technology Index ETF (513180. SH), which is the largest ETF tracking the Hang Seng Technology Index; The second is the Hang Seng Internet ETF (513330. SH), which focuses on internet leading companies such as Tencent Holdings, Alibaba, Meituan, Xiaomi, Baidu, and is also the Hong Kong stock ETF with the largest number of holders; The third is the Hong Kong Stock Connect Technology ETF Fund (159101. SZ), which covers popular tracks such as AI applications, innovative drugs, robots, and intelligent vehicles, comprehensively covering the technology sub sectors of the Hong Kong stock market.