Zheshang Securities released a research report saying that the marginal catalyst for the sharp rise in Hong Kong stocks since late April is driven by capital and improved expectations. Looking ahead, profit-side changes are the core driving factor in the trend of Hong Kong stocks. It is expected that Hong Kong stocks will shift from the rapid rise in the previous period to a slow bull pattern. Hong Kong stock profits are mainly affected by China's macroeconomic economy. Combined with historical data$Hang Seng Index (800000.HK)$There is a strong positive correlation between trends and inventory cycles. The current inventory removal cycle has reached two years since April 2022. The positive factors of the current inventory cycle have increased. The April data showed that the revenue and inventory growth rates of industrial enterprises were 2.6% and 3.1% respectively, up from the previous month. Looking at the driving factors, on the one hand, thanks to overseas inventory replenishment, exports have continued to pick up since 2024; on the other hand, real estate policies have been intensively released since May 17, and ultra-long-term treasury bonds have been issued, and positive factors have continued to accumulate.

The main views of Zheshang Securities are as follows:

How to view recent fluctuations in Hong Kong stocks

After experiencing a rapid rise from April 19 to May 20, the short-term sentiment of Hong Kong stocks was high. Combined with short-term sentiment indicators, the share of weekly rising companies in Hong Kong stocks is at a relatively high level in history. Furthermore, as of May 24, the share of Hong Kong stock short sales volume fell back to 12.6%, which is at a low level in the past three years. From the perspective of the AH premium, the valuation premium for A-shares has recently been drastically reduced compared to Hong Kong stocks. As of May 24, the Hang Seng AH share premium index was 136, close to the level of the end of January 2023.

Fluctuations in Hong Kong stocks have increased recently. The bank believes that the increase in short-term congestion and the slowdown in capital inflows are the main factors triggering recent fluctuations in Hong Kong stocks. On the one hand, according to Bloomberg's consistent profit forecast, the market's profit expectations for Hong Kong stocks have not changed significantly recently. On the other hand, from the perspective of the turnover rate, the daily turnover rate of Hang Seng Index and Hang Seng Technology on May 24 was 0.35% and 0.88% respectively, which is significantly higher than the average daily level of the past three years; second, from the perspective of incremental capital, short-term net inflows have slowed, and the number of shares held by international intermediaries in Hong Kong stocks has not increased significantly since May, and the net inflow of southbound capital in May was slower than in April.

How to view the subsequent trend of Hong Kong stocks

Looking ahead, profit-side changes are the core driving factor in the trend of Hong Kong stocks. It is expected that Hong Kong stocks will shift from the rapid rise in the previous period to a slow bull pattern. For profit-side analysis, this line develops it from the perspective of the inventory cycle. Hong Kong stock profits are mainly affected by China's macroeconomy. Combined with historical data, there is a strong positive correlation between the Hang Seng Index trend and the inventory cycle. The current inventory removal cycle has reached two years since April 2022. The positive factors of the current inventory cycle have increased. The April data showed that the revenue and inventory growth rates of industrial enterprises were 2.6% and 3.1% respectively, up from the previous month. Looking at the driving factors, on the one hand, thanks to overseas inventory replenishment, exports have continued to pick up since 2024; on the other hand, real estate policies have been intensively released since May 17, and ultra-long-term treasury bonds have been issued, and positive factors have continued to accumulate.

How to view the allocation of the Hong Kong stock industry

Combined with Bloomberg data, the IT, real estate and construction, and materials industries are expected to grow faster in 2024 and 2025. Based on industry views, the industry leads of Hong Kong stocks can be divided into high dividends, technological innovation, and leading consumers. First, the direction of high dividends, combined with industry views, communication concerns$CHINA MOBILE (00941.HK)$,$CHINA TELECOM (00728.HK)$,$CHINA UNICOM (00762.HK)$, non-bank attention$PICC P&C (02328.HK)$, petrochemical concerns$CNOOC (00883.HK)$,$SINOPEC CORP (00386.HK)$,$PETROCHINA (00857.HK)$. Second, the direction of scientific and technological innovation, combined with industry and Internet attention$TENCENT (00700.HK)$,$MEITUAN-W (03690.HK)$,$BILIBILI-W (09626.HK)$, computer monitoring$INSPUR DIGI ENT (00596.HK)$. Third, leading consumer direction, combined with industry views, educational attention$FENBI (02469.HK)$,$SCHOLAR EDU (01769.HK)$,$TIANLI INT HLDG (01773.HK)$, textile and clothing concerns$ANTA SPORTS (02020.HK)$,$BOSIDENG (03998.HK)$,$TOPSPORTS (06110.HK)$, catering attention$HAIDILAO (06862.HK)$,$Super Hi International Holding (HDL.US)$,$DPC DASH (01405.HK)$.

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