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<Research>CICC Advises to Actively Buy during HK Bourse Slump, Take Moderate Profits amid Hype, Shift to Div. in ST while Tech Remains Main Theme
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CICC released a Hong Kong stock strategy report, which noted that the recent dumpy ride of the local market is not a new phenomenon. Since late February, despite multiple rapid surges driven by short-term sentiment and capital influx, the market has consistently failed to achieve an "effective breakthrough" above the range previously outlined by CICC. CICC stated that the essence of the current market rally lies in the "breakout" of DeepSeek, triggering a re-rating of the tech sector, which constitutes 40% of the HSI’s "tech-heavy" portion and remains the medium- to long-term focus. However, once sentiment is fully priced in and valuations reach reasonable levels, market attention naturally shifts to future profit potential, increasing divergence and requiring stronger catalysts to push higher (akin to BABA-W (09988.HK)’s capex notably beating forecast a month ago). A recent interesting phenomenon is that, with the earnings season underway, leading companies like TENCENT (00700.HK), XIAOMI-W (01810.HK), and XPENG-W (09868.HK) saw their stock prices slump despite results beat, indicating profit-taking by some investors. Additionally, Tencent’s capex not hugely exceeding forecasts directly led to sharp declines in IDC leaders like GDS-SW (09698.HK) and VNET (VNET.US) post-earnings. The "first stage" of repair boosted by sentiment and expectations was largely concluded. If profit potential expands moving forward, a scenario akin to Nvidia’s "the higher the prices, the lower the valuations" could emerge, though this is where market divergence is most pronounced. What’s next? CICC advised actively buying during Hong Kong stock downturns and taking moderate profits during exuberance, shifting short-term focus to dividends while keeping tech as the main theme. Overall, CICC maintained its HSI forecast at 23,000-24,000, with a bull case of 25,000, and continued to view the 40% "tech-heavy" portion as the structural focus. The broker had previously cautioned that chasing at these levels offers poor cost-effectiveness. For those unwilling to reduce positions, a moderate shift to dividend-style stocks is viable, though tech remains the core theme. Investors can rotate back at an opportune moment with the right catalyst, hedging against volatility. AAStocks Financial News |
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