Hong Kong stocks have completely recovered the losses after the announcement of the equal tariffs.
According to Zhitong Finance APP, BOCOM INTL indicates that Hong Kong stocks have fully recovered from the losses incurred after the announcement of the reciprocal tariffs, surpassing the October 2024 high. However, there is still some distance from the highs reached in mid-March of this year. Given the unexpected outcomes from the first negotiations between China and the United States this year, it can be expected that subsequent tariff negotiations between the two sides will continue to progress in a constructive direction. The bank believes that in the short term, the progress in economic and trade negotiations between China and the United States significantly reduces global trade and recession risks, and market sentiment is expected to remain stable in the short term, providing positive catalysts for the Hong Kong stock market.
Although the overall risk premium has significantly declined, it is expected that investors' market sentiment will remain cautious in the face of ongoing uncertainties regarding the direction of future tariff policies.
In terms of industry allocation, BOCOM INTL suggests focusing on three main lines:
(1) Continue to be Bullish on the technology innovation main line: including technology hardware (semiconductors, new energy vehicle industry chains, etc.), Internet technology (AI, cloud computing, etc.), which are expected to benefit from dual drivers of policy support and demand growth;
(2) High dividend main line: Given the relatively high external uncertainties, along with a loose liquidity and low-interest environment, the attractiveness of high dividends will continue to increase, focusing on banks, utilities, and the telecommunications industry;
(3) Policy dividend main line: In an environment of reserve requirement ratio cuts and interest rate reductions, brokerages, Insurance, and other financial service Institutions will directly benefit from increased market activity and a rebound in risk appetite, as well as high-quality consumer leaders in the Hong Kong stock market that are expected to benefit from the ongoing implementation of consumer support policies.
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