Huatai Securities: Focus on supply chain and cash flow stability in Hong Kong stocks

Ask AI · How does Huatai Securities view investment opportunities after the sentiment index’s panic?

Every Daily AI Express, Huatai Securities research report says that in Hong Kong stocks, the market’s current bottom is marked by choppy, tug-of-war trading. On the one hand, the Middle East conflict still has uncertainties; unlocking upside potential requires waiting, and changes in aviation status as well as expectations for a Federal Reserve rate cut are key points to track. On the other hand, the Hong Kong stocks sentiment index has been operating in the panic range for some time, and the market’s downside risk has been gradually worked through. Focusing on portfolio structuring is the priority at this stage, with two recommendations. First, the market’s current pricing of downward revisions to growth may still be insufficient; therefore, continue to maintain a defensive exposure and focus on allocating to operational dividend-type assets, such as banks, railway and highway transportation, and Hong Kong local utilities. For cyclical dividend-type assets such as oil and gas, pay attention to the risks of crowding and rising volatility. Second, further rebalance and optimize the portfolio structure along domestic and external demand. Underweight external-demand options with relatively large exposure to income and supply-chain risks in the Asia-Europe region, such as consumer electronics. Continue to hold mid-term external-demand assets where China’s advantages may not decline but could rise further, including China’s midstream manufacturing and the broad energy chain. Increase allocations to some positions that are cleared in the market and where expectation downgrades are relatively more fully priced in for domestic consumption, such as dairy products, etc.

Daily Economic News