Among the top three major events in China's capital markets this week, the first domino from the U.S. presidential election has already fallen. According to the latest estimates by the Associated Press, Republican presidential candidate and former President Trump has secured over 270 electoral votes needed for victory in the 2024 U.S. presidential election.

In the early hours of the 6th of March, Eastern Time, U.S. presidential candidate Trump announced his victory in the 2024 presidential election. At the same time, a 'Trump trade' storm swept through the global capital markets, leading the U.S. stocks to soar. Overnight, all three major indexes hit historical highs, with banks, traditional energy, and cryptocurrencies sectors all rising.

The U.S. election has disrupted the market! Hong Kong stocks saw a surge in trading volume, entering a reversal window. What will happen next?

With the U.S. election results finalized, the willingness of southbound funds to flow into Hong Kong stocks has strengthened again. Yesterday, the Hang Seng Index traded at 216.818 billion Hong Kong dollars throughout the day, a significant increase from the previous period, marking a new high in nearly half a month. Southbound funds aggressively acquired 21.487 billion Hong Kong dollars worth of Hong Kong stocks. Despite the lackluster performance of U.S.-listed Chinese stocks affecting the market, Hong Kong stocks opened collectively lower today. However, led by the consumer and financial sectors, a strong rebound was achieved, with all three major indexes rising by over 2% at the close.

Regarding the impact of the U.S. election on the trend of Hong Kong stocks, institutions hold various opinions, but overall, they remain optimistic about the future performance of Chinese assets.

From a macro perspective, the overwhelming victory of the Republican Party implies that Trump's various policies will be rolled out relatively quickly. Trump previously claimed he would impose a global tariff of 10% and a 60% tax rate on specific countries, which seems to have a certain negative impact on Hong Kong and A-shares. However, looking back at the Trump 1.0 era from 2017 to 2020, the close to 30% gain of the Hang Seng Index was not bad.

Hong Kong stocks have always been more susceptible to overseas fluctuations. Zhao Wenli, Chief Hong Kong Stock Strategist at CCB International, believes that although Hong Kong stocks are affected by the potential policy risks brought by the expected election of Trump, short-term volatility has intensified and downward pressure has increased. However, benefiting from China's fiscal policy support and economic improvement expectations, the downside for correction below 20,000 points is expected to be very limited. In the medium to long term, it is a good opportunity to buy on dips.

UBS and CCB International share a similar view, believing that the U.S. election results may intensify short-term volatility in Chinese stocks, but short-term fluctuations are also brewing long-term opportunities.

中国股票估值已在相对较低的水平，在特朗普获胜的情况下，中国政府可能积极加大政策刺激力度。由于中美贸易额在特朗普第一任期间大幅下降，MSCI中国指数成份股中的美国营收敞口仅不到5%。预期特朗普将可能会寻求与中国政府进行谈判，最终将关税范围限制在特定的领域。

中信建投则更为乐观，他们表示，由于牛市中期逻辑并未改变，无论短期外部变量如何演绎，市场有望维持较高风险偏好。

目前市场风险偏好处于较高位，增量资金通过index funds持续流入，个人投资者和机构参与度都有提升迹象。此外，外资仍有补配中国资产需求，长线资金仍在关注中国财政政策力度和经济数据回暖状况，如果短期政策信号较强，长线资金可能也将显著入场。

财信金控首席经济学家伍超明则表示，不必过度高估美国大选对中国资产的扰动。

从基本面看，国内经济增长拐点初现，经济回升向好态势的确定性高；从资金面看，港、A股市场交易活跃、流动性充裕；从情绪面看，2024年国内股票市场已部分消化了美国大选的影响。

特朗普2.0时代，哪些板块有望崛起？

• Cryptocurrency-related assets

After Trump returned to the White House, cryptocurrencies that play a central role in the 'Trump Trade' are being highly favored by investors. Cryptocurrency spot ETFs and futures ETFs in the Hong Kong stock market have undoubtedly become one of the biggest beneficiaries, among which$Bosera HashKey Ether ETF (03009.HK)$,$ChinaAMC Ether ETF (03046.HK)$,$Harvest Ether Spot ETF (03179.HK)$,$CSOP Ether Futures ETF (03068.HK)$achieving a growth of over 8% on average today, while $Harvest Bitcoin Spot ETF (03439.HK)$, Bosera $Bitcoin (BTC.CC)$ has recorded a growth of over 20% within 60 days. $Samsung Bitcoin Futures Active ETF (03135.HK)$ and $CSOP Bitcoin Futures ETF (03066.HK)$ Within 60 days, the increase has exceeded 55%.

Jeffrey Ding, Chief Analyst of HashKey Group, stated that a series of policies promised by Trump during the campaign in support of cryptocurrencies, such as including Bitcoin in the national reserves, replacing the current SEC chairman Gary Gensler, are seen as significant bullish signals for the market. In August this year, former US president and Republican presidential candidate Trump released a video on X platform, stating his plans to make the USA the 'cryptocurrency capital of the world.'

• The direction of technology domestic substitution.

In view of the impact of Trump's tough trade policy, under the expectation of high tariffs in the future, the export chain industry will face significant pressure, especially in areas such as semiconductors, artificial intelligence, which may be affected by US investment and technology export restrictions, thus fueling the sentiment of domestic substitution. Zheshang Securities stated that areas with high defense and independence such as chip semiconductors, military industry, may experience smaller impacts.

Hong Kong stocks in the semiconductor sector have performed particularly strongly in the past two months.$HG SEMI (06908.HK)$,$SOLOMON SYSTECH (02878.HK)$Achieved a doubling within 60 days.$SMIC (00981.HK)$Leading domestic semiconductor companies also recorded gains of over 60%.

• Technology, consumer, financial, and other sectors.

According to a report released by the Hang Seng Index Company, looking back at the performance of the Hong Kong stock market during Trump's tenure from 2017 to 2020, technology stocks outperformed as the best-performing industry during this period, with an increase of up to 224%. In addition, the healthcare industry and essential consumer goods also saw significant increases, rising by 140% and 101% respectively.

Guotai Junan International believes that the current valuation level of the Hang Seng Index is not high. With the outcome of the U.S. presidential election determined, the risk assessment of the Hong Kong stock market has been lowered. The future trend of the Hong Kong stock market is expected to be upward, with industries sensitive to interest rates having greater price elasticity, including internet leaders, pharmaceuticals, and consumer goods.

Today, the csi consumer 360 index took the lead. As of the time of writing,$JIUMAOJIU (09922.HK)$Surging more than 12%,$HAIDILAO (06862.HK)$Increased by almost 9%,$XIABUXIABU (00520.HK)$,$HELENS (09869.HK)$All rising more than 8%.

China-affiliated brokerage stocks also collectively surged at the close, as of the writing, $CMSC (06099.HK)$ rising more than 15%, $CITIC SEC (06030.HK)$ rising nearly 14%, $CSC (06066.HK)$ rising more than 10%. Everbright Securities stated that with multiple bullish policies being successively introduced, market sentiment is gradually improving. With the expectation of fiscal stimulus, large financial stocks are also expected to usher in the second wave of the main upward trend.

UBS believes that the long-term upward trend of Hong Kong stocks in the future is still primarily driven by internal factors. They stated that there is no need to overestimate the disturbance of the U.S. elections on Hong Kong and A shares. Once the decrease in Chinese stock prices due to Trump's victory news reaches double digits, the short-term downside risk has been fully factored in, and it may be worth considering increasing positions in Chinese stocks.

Minsheng Bank's Chief Economist Wen Bin analyzes the two main reasons behind the 'Me First' mentality:

First, before Trump took office, the valuations of the Hong Kong and A-share markets were relatively low;

Second, the improvement in corporate profits and the stable economic fundamentals still form a trend of 'Me First' trend market.

Editor/Lambor