According to the Securities Times app, CSC Securities released a research report stating that with the recent decline in the Hong Kong stock market and the divergence in trends between the Hong Kong and A-share markets, the high cost performance of Hong Kong stocks and AH premiums are once again highlighted. Currently, Trump's victory has had an impact on the trend of Hong Kong stocks, but in the medium term, Trump's policy proposals are favorable for the liquidity of Hong Kong stocks. Therefore, after the short-term impact ends, the Hong Kong stock market may see an uptrend, making it an opportune time to position in Hong Kong stocks with high cost performance. The technology sector is the most recommended.

Is the current pullback in the Hong Kong stock market sufficient?

The Hong Kong stock market began its pullback on October 8, showing a significant divergence in the movement during the pullback period compared to the A-shares, with the AH premium back at a high level. This is mainly due to the Hong Kong market being dominated by institutional investors, a low acceptance of thematic investment, and the Hong Kong market being more significantly impacted by the short-term effects of Trump's trading. Currently, the Hang Seng Index has dropped more than 2/3 of its previous gains. We believe that considering the relatively balanced background of bullish and bearish factors at this stage, the current pullback in the Hong Kong stock market has been quite sufficient.

Where is the latest position in the long-term cycle of the Hong Kong stock market?

The earnings growth rate recovery of the Hong Kong stock market shows a leading advantage compared to the domestic fundamentals, particularly in the information technology sector and non-essential consumer goods sector. In terms of valuation, after the recent pullback, the PE and PB percentile over the past ten years have decreased to the 21.2% and 21.1% percentiles respectively, while the AH premium has risen and the dividend yield still has a high margin of safety.

How to view the future trend of Hong Kong stocks under the backdrop of Trump's presidency?

Trump's tax reduction proposal and the tendency to pressure the Fed to cut interest rates are both favorable to the overall overseas liquidity. As Trump tends to prioritize implementing domestic economic policies, after the recent short-term impact subsides, liquidity is expected to flow back to Hong Kong stocks, making the current layout of Hong Kong stocks highly cost-effective. Among the various sectors of Hong Kong stocks, the technology internet plus-related sector in Hong Kong stocks has significantly recovered in terms of profits, benefited from the dividend repurchase trend in terms of valuation, and favored by foreign capital in terms of liquidity, which is worth paying attention to.