Hong Kong stock index futures settlement day saw the 25,000 level regain after slipping, then rebound by 176 points, closing at 25,182 points. The index did not break through, but individual stocks shone brightly. Lenovo Group (00992) announced quarterly results earlier and surged nearly 20% on the same day. On Friday, it gapped up and soared over 30%, closing up about 22%. Over five trading days, it gained 82.5%, and for the month, the stock price more than doubled, claiming the top spot among blue chips.

Lenovo's rally was not only due to stellar earnings but also stimulated by Dell (DELL). As Wall Street's earnings season neared its end, surprises still emerged. Software stock Snowflake skyrocketed 36.5% after earnings, having been heavily sold off earlier. Dell, on the other hand, hit new highs again due to better-than-expected profits and strong demand for AI servers. Companies that thrived during the millennial tech boom—Cisco Systems and Intel—each surpassed their 2000 peak in February and April respectively, while Dell, delisted for five years (from October 2013 to December 2018), repeatedly hit new highs in May.

Dell, Intel, and Cisco's stock prices rose 56.3% to 2,140% in April and May, marking a major turnaround for these veteran tech stocks. Whether the AI boom is just a fleeting trend or a sign of new "growth engines" remains uncertain. One key factor may be the performance of SpaceX around its upcoming IPO in June, as well as the influx of "trillion-dollar" players like OpenAI and Anthropic, which will test market liquidity.

Currently, forecasts of a potential stock market crash naturally attract attention. If one believes this, then accelerating cashing out and maintaining a "cash is king" stance makes sense. However, warnings of bubbles bursting have been issued repeatedly since mid-last year, and US stocks are still seeking a top. Exiting the market entirely is neither mainstream nor the best choice; instead, many investors experience FOMO (fear of missing out), which continues to fuel market momentum.

If the global bull market is not over and there is no need to fear a "bear claw," then the Hong Kong market's lagging opportunities should not be dismissed, as valuations remain low. Bloomberg data shows the Hang Seng Index's P/E ratio is below 13 times, compared to nearly 20 times for the Shanghai Composite. South Korea's KOSPI, Japan's Nikkei 225, the S&P 500, and Taiwan Weighted Index range from 22 to 29 times, indicating Hong Kong stocks are relatively cheap. Even if external markets crash sharply, it would be difficult for Hong Kong stocks to be immune, though the potential downside is definitely smaller.

It is well known that the Hang Seng Index underperformed in this rally mainly because heavyweight platform economy and new energy vehicle stocks showed no signs of recovery. However, as Wall Street's AI concept spreads, more sectors are gaining favor. Companies like Lenovo, which have recovered from lows, can become new drivers. Additionally, many recently listed tech stocks, despite high volatility, are increasing the "AI quality" of Hong Kong stocks. In the short to medium term, the outlook is not necessarily pessimistic.

As shown in the【chart】, after Hong Kong stocks failed to break 27,000 points in May and sharply declined, support has been found at the bottom of the range since Q4 last year. This indicates the traditional "five-month bear" pattern is safe for now, and the market has not yet exited a sideways trend. The TrendWatch channel, calculated with one standard deviation, has shifted from downward to upward. As long as the 25,000 level holds, the Hang Seng Index could return to the dense area of the moving average at 25,500 to 26,100 points. The "Six Extremes" need not be worried for now. Trading based on trend continuation rather than market timing, and seeking opportunities through earnings, can help improve success rates.

Hong Kong Economic Journal Investment Research Department

Try EJFQ now to access exclusive content

SPCX-0.75%

This page may contain third-party content, which is provided for information purposes only (not representations/warranties) and should not be considered as an endorsement of its views by Gate, nor as financial or professional advice. See Disclaimer for details.