According to the latest news from the Wise Financial APP, Guosen Securities released research reports stating that the emotions were unexpected, and the Hang Seng Index target was raised. Last week, the bank proposed that the funds in the Hong Kong stock market (Fed rate cuts) and the fundamentals (interim performance reports) have both stabilized and improved, catalyzing the recovery of sentiments, and set a target range of 21800-22000 for the Hang Seng Index. However, this week, with the successive release of major policies, the market sentiment surged beyond expectations. In the new context, the qualitative assessment of the market target is not only for recovery, but is on the rise. Therefore, the risk premium target has been adjusted from 6% to 5.7%, a value that represents a moderate bullish sentiment level in the late stage of economic expansion. Accordingly, the Hang Seng Index target was raised to 22700-23000. In the medium term, it is recommended to focus on leading companies with good performance and strong growth potential, including: internet-related, auto manufacturers, consumer electronics, and innovative drugs; and to recommend the Hang Seng HK 35 which will benefit from the rate cuts.

Guosen Securities' main points are as follows:

Stock price performance: Hong Kong stocks surged upwards rapidly.

This week, the Hang Seng Index rose by 13%, while the Hang Seng Composite Index rose by 13.1%. In terms of style, the middle cap stocks (Hang Seng mid-cap stocks +14.9%) > small cap stocks (Hang Seng small cap stocks +13.2%) > large cap stocks (Hang Seng large cap stocks +12.8%).

Concept indices all saw increases, with the top performers being Hang Seng Internet-related (+21.6%), Hang Seng Technology (+20.2%), Hang Seng Consumer Electronics (+18.9%), and Hang Seng Autos (+16.7%).

In the Hong Kong stock connect industries, 29 sectors saw increases, while one sector decreased. The top gaining industries were: construction materials (+24.7%), csi sws food & beverage index (+22%), non-banking financials (+22%), consumer services (+21.1%), and textiles and outfits (+19.4%); the declining industry was: petroleum and petrochemicals (-1%).

Capital Intensity: Funds flowed into the entire industry at a rare speed.

This week, individual stocks in the Hong Kong stock market faced a large inflow of funds, with an overall daily average fund intensity (daily average change x daily average volume) of +4.77 billion Hong Kong dollars per day, compared to +0.8 billion Hong Kong dollars per day last week, and an average of +0.18 billion Hong Kong dollars per day over the past four weeks; an average of +0.15 billion Hong Kong dollars per day over the past 13 weeks.

By industry, funds flowed into all 30 industries. Industries with significant fund inflows include: non-bank financials (+0.92 billion Hong Kong dollars per day), media (+0.57 billion Hong Kong dollars per day), consumer services (+0.56 billion Hong Kong dollars per day), real estate (+0.43 billion Hong Kong dollars per day), retail (+0.4 billion Hong Kong dollars per day); industries with slower fund inflows include: steel (+1.8 million Hong Kong dollars per day), defense and military (+2.2 million Hong Kong dollars per day), agriculture, forestry, animal husbandry, and fisheries (+3.3 million Hong Kong dollars per day), basic chemicals (+5.2 million Hong Kong dollars per day).

Earnings Outlook: Profit forecasts are healthy and on the rise.

This week, overall EPS for Hong Kong stock connect increased by 0.3%.

Structurally, EPS forecasts for 23 industries have been raised, while EPS forecasts for 3 industries have been lowered, and 2 industries have remained relatively unchanged. Industries leading in upward revisions include: steel (+11.7%), light manufacturing (+4.3%), basic chemicals (+1.5%), computers (+1.5%), transportation (+1.2%); industries with downward performance expectations include: construction (-2.1%), building materials (-1.4%), power equipment and new energy (-0.4%).

Risk warning: Uncertainty in economic fundamentals, uncertainty in international political situation, uncertainty in US fiscal policy, uncertainty in monetary policy of the Federal Reserve.

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