Hong Kong H-Index Surpasses 9000... Tech-Centered Portfolio Remains Effective

The Hong Kong H-Share Index (HSCEI), composed of mainland Chinese companies listed in Hong Kong, surpassed the 9,000 mark for the first time in 40 months, prompting securities analysts to assert that a tech-focused portfolio strategy remains effective. Specifically, advanced manufacturing, oversold platforms, and domestic consumption stocks were highlighted.

On the 19th, Jeon Jong-gyu, a researcher at Samsung Securities, stated in his report titled "Review of the Hong Kong Stock Market Rally" that "the strength of the Hong Kong stock market is being driven by government policies and a tech rally."

The previous day, the H-Share Index closed at 9,177.80, up 2.79% from the previous session. This is the first time it has surpassed the 9,000 level since October 2021. The year-to-date increase exceeds 25%.

Jeon attributed the strong performance of the H-Share market to government policies and the tech rally. He explained, "The combination of government policies announced at the March (China) Two Sessions did not meet expectations in terms of total economic stimulus strength, but proactive domestic demand stimulation and support for technological innovation policies have supported momentum in the stock market," adding, "The rally in Chinese tech stocks has continued since the beginning of the year."

He also noted, "The driving forces behind the China tech rally are the deep-sea effect (emergence of innovative companies), the government policy shift from regulation to nurturing, and a manufacturing paradigm shift," and assessed that "while short-term price corrections in tech stocks may occur, expectations for the structural growth of China tech remain valid."

Accordingly, Jeon advised the need to prepare for a volatile market environment due to uncertainties surrounding US-China relations, while recommending maintaining a tech-focused portfolio strategy. He said, "While profit-taking volumes are emerging, there is a possibility that former US President Donald Trump's aggressive pressure on China will continue," and predicted, "In periods of increased financial market risk, the government’s policy response will be strengthened."

Furthermore, he stated, "We prefer the Hong Kong stock market over the mainland market. The Hong Kong market offers a superior environment compared to the mainland market in terms of valuation attractiveness, inflow of mainland capital liquidity, dollar pegging, and currency hedging," and recommended, "The China portfolio should be allocated to advanced manufacturing, oversold platforms, and domestic consumption stocks." He added, "From a fundamental perspective, the earnings per share (EPS) growth rate of China tech stocks is expected to be the highest."

This content was produced with the assistance of AI translation services.