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<Research>GTJAI Suggests to Form Core Strategy with Div. Style for H Shrs; Southbound Funds Mainly Net Inflow into CN Banks
Recommend 24 Positive 47 Negative 12 |
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Guotai Junan International released a strategy report on Hong Kong stocks. Looking ahead, new upward momentum for Hong Kong stocks is still being nurtured, after the sentiment and valuation levels of the Hong Kong stock market have been restored. Given the enormous uncertainties in the international situation, investors are advised to form their core strategy in dividend style in the short term and patiently wait for the situation to become clearer. Historical experience taught that dividend yielders such as telecoms and utilities can outperform the market during times of high uncertainty, aided by their stable cash flow and cyclical resistance. Moreover, as the situation gradually becomes clearer, switching styles amid dips and increasing allocation to directions supported by domestic policies are key to achieving excess returns. Specifically, 1) sectors such as semiconductors, electronics, internet, and innovative drugs may benefit from Trump's tariff policy, under the logic of self-control and import substitution; and 2) industries related to domestic demand may be pampered by rising expectations of consumption policies, in the context of waning external demand and waxing external pressure. Hong Kong stock market has taped into a volatile phase, with the market on a see-saw, the broker noted. In terms of valuation levels, the current HSI PE ratio is at the historical average level in almost ten years, mildly below the level before Trump announced tariffs, reflecting that the risk sentiment of the Hong Kong bourse has gradually recovered after the tariff impact. Southbound funds maintain a net inflow, but the speed of net inflow has decelerated, suggesting a “pause and observe” stance. During this period, southbound funds is mostly net inflowed to the banking sector, with the large financial sector receiving net inflows surpassing HKD16.5 billion. Meanwhile, the information technology sector has experienced a net outflow of southbound funds exceeding HKD20.5 billion. AASTOCKS Financial News Website: www.aastocks.com |
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