Hong Kong's main indexes have risen for two consecutive weeks, and today's upward trend continues. As of the time of writing, the Hang Seng Index has risen by 0.95%, while the Hang Seng Technology Index has risen by 1.94%. $Hang Seng Index (800000.HK)$ The financial report season's performance is resilient, with a strong fundamental support. $Hang Seng TECH Index (800700.HK)$ According to statistics, as of August 16, 2024, although only 89 of the Hang Seng Composite Index's constituent stocks have released their latest financial reports, these include many heavyweight stocks, totaling 44.7% of the market capitalization. Among the constituent stocks with released performance reports, the total revenue for the first half of 2024 decreased by 0.6% year-on-year, but the profit growth rate was 16.1%, which was slightly lower than expected for the former and 0.7 percentage points higher than expected for the latter, especially for heavyweight internet companies with profits higher than expected. In addition, Goldman Sachs and other companies repurchased approximately US$6.7/3.3/10.6 billion in the first half of this year, reflecting confidence at the corporate level. Based on the expected full-year performance growth rate of the Hong Kong stock market's indices in 2024, the profit growth rate of the Hang Seng Technology Index (Bloomberg consensus forecast) has been continuously raised since the first-quarter report was released. After the adjustment, the full-year profit growth rate has increased by 7 percentage points to 14.7% compared to the previous low point, demonstrating strong confidence in performance growth. In addition, the expected performance growth rates of the other three major indices have also been upwardly revised, indicating that the Hong Kong stock market's performance fundamentals have good support.

According to statistics, as of August 16, 2024, although the Hang Seng Composite Index has only disclosed the latest financial reports of 89 constituent stocks, they include many stocks with higher weights, with a total market capitalization of 44.7%. From the disclosed financial reports of constituent stocks, the total revenue in the first half of 2024 fell by 0.6% year-on-year, but the profit growth rate was 16.1%, slightly lower than expected, and the latter was 0.7 percentage points higher than expected. Especially the disclosed weighted Internet leading companies have higher profits than expected; and Goldman Sachs, Tencent, and Alibaba bought back about 6.7/3.3/10.6 billion US dollars respectively in the first half of this year, reflecting that companies are confident in themselves. Looking forward, the projected full-year earnings growth rate of Hang Seng Technology (Bloomberg consensus expectation) has continued to be raised since the disclosure of the first quarterly report, and the full-year earnings growth rate has risen 7 percentage points from the previous low point to 14.7% with the recent increase; At the same time, the expected performance growth rate of the three major indexes last week has also been significantly revised upward, and there is good support for Hong Kong stocks' performance fundamentals in the future.

The U.S. recession expectation was dashed by data, and the recovery of macro liquidity has helped boost the Hong Kong stock market's rebound.

Recently, global markets have fallen, with a key reason being the market's expectation of a U.S. recession, but a series of data released last week dealt a heavy blow to this expectation. U.S. retail sales rose 1% in July, marking the largest monthly increase in more than two years. Consumers spent over $709 billion on various goods, including cars, appliances, food, and clothing. Walmart reported second-quarter sales slightly above $169 billion and raised its full-year profit forecast, stating that it continued to see a steady spending trend in the first two weeks of August. Doug McMillon, CEO of Walmart, said, “We see that our members and customers are still savvy, value-oriented, focused on essentials rather than discretionary items. It's important to note that we haven't seen any further deterioration in consumer health.”

The initial jobless claims in the United States released last week decreased by 7,000 people to 0.227 million people, far below Wall Street's expectations, alleviating concerns about a slowdown in the labor market. Earlier last week, the National Federation of Independent Business (NFIB) released a key indicator measuring small business optimism that hit its highest level in two years, while the Institute for Supply Management's (ISM) July service activity data continued to expand for the fifth consecutive month this year. Goldman Sachs' chief U.S. economist Jan Hatzius stated in a report that the probability of an economic recession was reduced from 25% to 20%, mainly due to the absence of any signs of an economic recession from the data released since August 2. If the August employment report appears “quite good,” the likelihood of a U.S. economic recession will be reduced to 15%. Hatzius believes that the Fed will cut interest rates by 25 basis points in September, but there is a possibility of a 50 basis point cut if the employment report is worse than expected. $TENCENT (00700.HK)$Please use your Futubull account to access the feature.$JD-SW (09618.HK)$Please use your Futubull account to access the feature.$BABA-SW (09988.HK)$ Institutions have stated that a series of data released has shifted the market's panic narrative from a hard landing of the U.S. economy to a soft landing. The marginal retreat of the risk-off sentiment also improved the offshore liquidity environment, further boosting the Hong Kong stock market's rebound.

EPFR data shows that active overseas funds continued to flow out of overseas Chinese stock markets last week, with an outflow of about $0.24 billion, narrowing from the outflow of $0.28 billion in the previous week. Since EPFR funds mainly represent long-term foreign allocation situations, the current willingness of foreign funds to flow out of the Hong Kong stock market is decreasing. Citic Securities believes that as the expected performance of the Hong Kong stock market's mid-year reports is gradually realized, foreign funds may return to the Hong Kong stock market. The end of August is approaching, which is the MSCI quarterly rebalancing period. Considering that the Hang Seng Index has once again underperformed major global markets in the past three months, passive funds will also have buying demand during the index adjustment period at the end of the month, which will also benefit the liquidity of the Hong Kong stock market.

Institutions generally recommend investing in Hong Kong's technology and internet-related sectors.

Institution should be translated as institutions. The specified phrase containing outlet should be translated as outflow. The specified phrase containing bullish should be translated as bullish.

Compared to the previous two weeks, Hong Kong's main indexes have risen for two consecutive weeks and continued its upward trend today. As of the time of writing, the Hang Seng Index has risen by 0.95% while the Hang Seng Technology Index has risen by 1.94%. The financial report season's performance is resilient, supporting a strong fundamental.

According to statistics, as of August 16, 2024, although only 89 of the Hang Seng Composite Index's constituent stocks have released their latest financial reports, these include many heavyweight stocks, totaling 44.7% of the market capitalization. Among the constituent stocks with released performance reports, the total revenue for the first half of 2024 decreased by 0.6% year-on-year, but the profit growth rate was 16.1%, which was slightly lower than expected for the former and 0.7 percentage points higher than expected for the latter, especially for heavyweight internet companies with profits higher than expected. In addition, Goldman Sachs and other companies repurchased approximately US$6.7/3.3/10.6 billion in the first half of this year, reflecting confidence at the corporate level. Based on the expected full-year performance growth rate of the Hong Kong stock market's indices in 2024, the profit growth rate of the Hang Seng Technology Index (Bloomberg consensus forecast) has been continuously raised since the first-quarter report was released. After the adjustment, the full-year profit growth rate has increased by 7 percentage points to 14.7% compared to the previous low point, demonstrating strong confidence in performance growth. In addition, the expected performance growth rates of the other three major indices have also been upwardly revised, indicating that the Hong Kong stock market's performance fundamentals have good support.

Recently, global markets have fallen, with a key reason being the market's expectation of a U.S. recession, but a series of data released last week dealt a heavy blow to this expectation. U.S. retail sales rose 1% in July, marking the largest monthly increase in more than two years. Consumers spent over $709 billion on various goods, including cars, appliances, food, and clothing. Walmart reported second-quarter sales slightly above $169 billion and raised its full-year profit forecast, stating that it continued to see a steady spending trend in the first two weeks of August. Doug McMillon, CEO of Walmart, said, “We see that our members and customers are still savvy, value-oriented, focused on essentials rather than discretionary items. It's important to note that we haven't seen any further deterioration in consumer health.”

The initial jobless claims in the United States released last week decreased by 7,000 people to 0.227 million people, far below Wall Street's expectations, alleviating concerns about a slowdown in the labor market. Earlier last week, the National Federation of Independent Business (NFIB) released a key indicator measuring small business optimism that hit its highest level in two years, while the Institute for Supply Management's (ISM) July service activity data continued to expand for the fifth consecutive month this year. Goldman Sachs' chief U.S. economist Jan Hatzius stated in a report that the probability of an economic recession was reduced from 25% to 20%, mainly due to the absence of any signs of an economic recession from the data released since August 2. If the August employment report appears “quite good,” the likelihood of a U.S. economic recession will be reduced to 15%. Hatzius believes that the Fed will cut interest rates by 25 basis points in September, but there is a possibility of a 50 basis point cut if the employment report is worse than expected.

Institutions have stated that a series of data released has shifted the market's panic narrative from a hard landing of the U.S. economy to a soft landing. The marginal retreat of the risk-off sentiment also improved the offshore liquidity environment, further boosting the Hong Kong stock market's rebound. Citic Securities believes that as the expected performance of the Hong Kong stock market's mid-year reports is gradually realized, foreign funds may return to the Hong Kong stock market. The end of August is approaching, which is the MSCI quarterly rebalancing period. Considering that the Hang Seng Index has once again underperformed major global markets in the past three months, passive funds will also have buying demand during the index adjustment period at the end of the month, which will also benefit the liquidity of the Hong Kong stock market.

Institutions generally recommend investing in Hong Kong's technology and internet-related sectors.

Institutions have stated that a series of data released has shifted the market's panic narrative from a hard landing of the U.S. economy to a soft landing. The marginal retreat of the risk-off sentiment also improved the offshore liquidity environment, further boosting the Hong Kong stock market's rebound.

EPFR data shows that active overseas funds continued to flow out of overseas Chinese stock markets last week, with an outflow of about $0.24 billion, narrowing from the outflow of $0.28 billion in the previous week. Since EPFR funds mainly represent long-term foreign allocation situations, the current willingness of foreign funds to flow out of the Hong Kong stock market is decreasing.

Citic Securities believes that as the expected performance of the Hong Kong stock market's mid-year reports is gradually realized, foreign funds may return to the Hong Kong stock market. The end of August is approaching, which is the MSCI quarterly rebalancing period. Considering that the Hang Seng Index has once again underperformed major global markets in the past three months, passive funds will also have buying demand during the index adjustment period at the end of the month, which will also benefit the liquidity of the Hong Kong stock market.

Institutions generally recommend investing in Hong Kong's technology and internet-related sectors.

CICC recommends three directions under structured market conditions: overall downside return (high dividends and repurchases for stable returns, i.e. cash cows with abundant cash flow), partial leverage (especially in technological growth industry that are still prosperous and associated with the new advanced production forces supported by the Third Plenary Session of the 18th CPC Central Committee and the Politburo meeting), and partial price-increase (natural monopoly sector, public utilities, etc.); Service-oriented consumption is also worth paying attention to as a staged opportunity under policy support, such as education and training.

CITIC Securities believes that in terms of industry allocation, it is recommended to focus on the internet and consumption industry with relatively significant performance expectation gaps or better performance in the period of foreign capital inflows, and with more significant value-for-money.

Guosen Securities maintains recommendations for Heng Seng utilities, Heng Seng HK 35 and Heng Seng Finance, and also suggests increasing investment in Heng Seng Internet.

ETFs related to Hong Kong tech and internet sectors.

Due to the simplicity of ETF investment, investors can grasp market opportunities by investing in ETFs, which requires only a focus on the direction of the corresponding sector, and without the need for in-depth analysis of individual stock performance to obtain the average return of the industry.

In terms of technology sectors, Heng Seng Tech Index related ETFs should be the main focus, such as $CSOP Hang Seng TECH Index ETF (03033.HK)$Please use your Futubull account to access the feature.$iShares Hang Seng TECH ETF (03067.HK)$ and $Hang Seng TECH Index ETF (03032.HK)$ and other symbols.

For the internet sector, focus on $Samsung CSI China Dragon Internet ETF (02812.HK)$ and also pay attention to those listed on US stock exchange. $KraneShares CSI China Internet ETF (KWEB.US)$.

Editor/Jeffy