Hong Kong Stocks Open | Hang Seng Index Up 0.44% at the Opening, Tech Stocks Continue Strong Performance, Alibaba (09988) Reclaims a Total Market Capitalization of HKD 3 Trillion

The Hang Seng Index opened 0.44% higher, and the Hang Seng Tech Index rose 0.91%. Technology stocks continued their strong performance, with Nio up more than 7%, Baidu Group up over 6%, JD.com up over 3%, and Pharmaron Beijing-B down nearly 4%. Alibaba opened 2.74% higher, hitting a new high in nearly four years, with its Hong Kong-listed market capitalization surpassing HKD 3 trillion again. Its cumulative increase this year has exceeded 96%.

Regarding the outlook for Hong Kong stocks,

BOCI Securities noted that under the current fundamental environment of accelerating domestic substitution and rapid development of the AI industry cycle, technology stocks are expected to benefit from this round of RMB asset revaluation opportunities. With the macro “weak recovery” pattern unchanged, large-cap technology companies still have room for further upside, and their absolute growth advantages remain evident. Combined with the recent linkage effect between Hong Kong-listed tech stock movements and broader market sentiment, multiple catalysts may lead to a dual improvement in market sentiment and momentum.

The strategy team at China Merchants Securities (Hong Kong) believes that, with an improving supply-demand landscape, China’s economic cycle is expected to welcome a turning point in business conditions. Capital expenditures and R&D investments in the technology sector will gradually translate into corporate profits, becoming a new growth engine. Against the backdrop of rising expectations for Federal Reserve interest rate cuts, both southbound capital and foreign investment are likely to continue flowing into the Hong Kong stock market. As a global valuation low, Hong Kong stocks are anticipated to experience mid- to long-term upside potential driven by future fundamental improvements, upward revisions in earnings forecasts, and valuation recovery.

Yi Xia, Chief Macro Economist at Huatai Securities, believes that the ample liquidity environment in Hong Kong’s stock market has not changed, and the recovery of fundamental expectations has played an important supporting role. The market’s earnings recovery stems partly from sectors such as technology, new consumption, and pharmaceuticals, which can achieve growth exceeding the economic cycle. Additionally, compared to last year, domestic policy measures have been stronger, providing greater stability in both the economy and policies, thereby boosting steady corporate profitability.

Yang Chao, Chief Strategy Analyst at China Galaxy Securities, suggests focusing on investment opportunities in three key areas of Hong Kong stocks going forward: First, sectors with relatively high earnings growth but valuations still at medium to low levels, such as discretionary consumption, staples, and utilities; second, sectors benefiting from increasing or ongoing favorable policies, such as AI supply chains and consumer sectors; and third, financial sectors offering relatively stable returns and higher dividend yields amid uncertainties both domestically and abroad.

This article is reprinted from ‘Tencent Stock Selection’, edited by Zhitong Finance: Li Fo.