Cathay Pacific Junan (Hong Kong) released a research report saying that Hong Kong stocks have fluctuated sideways in the short term. It is recommended to mainly use the dividend style to buy technology manufacturing and export chain industries at low prices: 1) In situations where overseas risk events have not been fully resolved and may disrupt the Hong Kong stock market, the high-dividend style with low risk characteristics still has allocation value, focusing on high-dividend industries such as communication operators, energy, and utilities. 2) With the promotion of technology policies and industries, technology growth stocks are expected to rise. Growth stocks are expected to rise this year, and industries such as new energy, semiconductors, technology and electronics are also worth paying attention to. 3) External demand is expected to benefit from a recovery in global manufacturing sentiment and a recovery in overseas real estate sales. Focus on relevant export chain enterprises, including equipment, furniture, home appliances, etc.
Cathay Pacific Junan (Hong Kong)'s views are as follows:
Domestic economic data are frequently better than expected, overseas institutions have revised their domestic economic prospects, and Hong Kong stocks have fluctuated and rebounded.
Last week, the manufacturing PMI for March, announced by the National Bureau of Statistics, returned to the expansion range. The non-manufacturing business activity index rose from the previous month, reflecting an increase in the level of sentiment. Hong Kong stock market sentiment was boosted and rose on the first day of last week. Overseas, the US ISM manufacturing PMI for March far exceeded market expectations. After the data was released, the market predicted that interest rate cuts in 2024 would drop to 65 basis points, lower than the bitmap guidelines announced by the Federal Reserve in March, and overseas liquidity expectations were tightened. Throughout the week, the Hang Seng Index rose 1.1% cumulatively, the State-owned Enterprises Index rose 0.9%, and the Hang Seng Technology Index fell 0.77%. On the industry side, stimulated by rising international commodity prices, the raw materials and energy industries performed well. Geographic risks are heating up, and international gold prices have risen for the third week in a row. Furthermore, US economic data is strong, and demand side expectations are rising. At the same time, due to supply-side restrictions on the supply side of resource products such as copper and aluminum, international metal prices have risen, driving up the Hong Kong stock raw materials industry. On the energy side, OPEC+ extended the production limit until the end of the second quarter. Overall supply and demand tightened international crude oil prices, and the Hong Kong stock energy industry had the highest increase.
The overall US labor market is tight, and the market continues to reduce the margin of the Federal Reserve's interest rate cut in 2024.
In March, the US added market expectations for non-farm payrolls. On the marginal side, the increase in government departments and commodity production departments is a major contribution. Among them, the commodity production sector mainly comes from contributions from the construction industry and manufacturing industry, reflecting the recovery of the US manufacturing industry and the replenishment of real estate reserves in the construction industry. The labor participation rate has risen and the unemployment rate has declined. The overall employment data is strong, and the market continues to revise the margin of the Federal Reserve's interest rate cut in 2024.
Looking back, after rebounding from the bottom of the Hong Kong stock market, the market fluctuated sideways in the short term.
The domestic economy is picking up, overseas institutions are improving domestic economic prospects, and sentiment in the Hong Kong stock market has recovered. The economic recovery has helped improve the overall profit expectations of the Hong Kong stock market. Overseas, on the one hand, US employment data shows that the labor market is still strong. On the other hand, the stickiness of US inflation exceeds market expectations, compounded by the recent rise in international commodity prices, increasing uncertainty about the prospects for reducing inflation overseas. Fundamentals are strongly disrupting the pace of the Federal Reserve's interest rate cut in 2024. Considering the many overseas risk events this year, the bank expects Hong Kong stocks to fluctuate upward, but there is limited room in the short term.
Hong Kong stocks have fluctuated sideways in the short term. It is recommended to use the dividend style and buy the technology manufacturing and export chain industries on dips.
1) In a situation where overseas risk events have not been fully resolved and may disrupt the Hong Kong stock market, a high-dividend style with low risk characteristics still has allocation value. It is recommended to focus on high-dividend industries such as telecommunications operators, energy, and utilities.
2) Technology growth stocks are expected to rise as technology policies and industries advance. The bank believes that growth stocks are expected to rise this year, and industries such as new energy, semiconductors, and technology electronics are also worth paying attention to.
3) External demand is expected to benefit from a recovery in global manufacturing sentiment and a recovery in overseas real estate sales. It is recommended to focus on relevant export chain enterprises, including equipment, furniture, home appliances, etc.
Risk factors: 1) Domestic economic recovery is less than expected; 2) international geopolitical friction is heating up; 3) the pace of monetary policy easing by the Federal Reserve falls short of expectations.