Hong Hao: The Hang Seng Tech Index is still hovering. It may rebound for a few days in the short term, but the high-valuation stocks are still not cheap enough, and they are not worth holding for the long term.

Jinse Finance reported that on July 9, renowned strategy analyst and Chief Investment Officer of Lianhua Asset Management, Hong Hao, shared his latest observations and judgments in an interview with foreign media on July 6, regarding the increasingly divergent pattern between the Hong Kong stock IPO market and the secondary market. Key points are as follows:

1. Funds traditionally allocated to the secondary market are now flowing entirely into the IPO market for "new share subscriptions," and many new stocks have performed exceptionally well, surging several times on their debut day. We would not be surprised if this outstanding performance continues in the coming months. Therefore, I believe the IPO market is still capturing all the attention, while the Hang Seng Tech Index remains stagnant.

2. (Regarding the upcoming wave of lock-up expirations) This is a significant risk. The reason many IPOs have performed well is that retail investors have very limited floating shares. This easily leads to price manipulation and squeezes retail investors. Therefore, once these locked shares become fully tradable, increasing the supply of retail shares, I believe selling pressure will follow. Moreover, many stocks have performed too well, giving holders a strong incentive to take profits.

3. The Hong Kong market index is mainly composed of software and internet platform companies, such as Alibaba and Tencent. I believe many of these stocks are considered "outdated" — they have not actively participated in AI and thus lag behind in the AI field. If you look at some AI-related stocks, their market caps are quite astonishing. Once the lock-up period ends and these restricted shares become freely tradable, it will put pressure on many of these high-flying stocks.

4. I believe the Hong Kong market was oversold last week. For example, the Hang Seng Index has fallen to levels not seen in years, around 22,000 points. Currently, the valuation of the Hong Kong stock exchange index is only a little over 10 times, which, while not historically the lowest, is among the cheapest. So I think people are trying to find value in these oversold stocks.

5. Last week's rebound, in my opinion, is better categorized as a technical rebound. Because if you look at the Relative Strength Index (RSI) and the wave structure of the Hang Seng Index, it has reached a level favorable for a rebound. I believe the rebound will last a few more days, after which people may come to realize that these stocks might still not be cheap enough for long-term holding.

6. Many mainland companies are choosing to list in Hong Kong. I believe many company owners tend to liquidate (reduce) their holdings after going public, so this is a new trend to watch. Because many of these stocks are overvalued and heavily overbought, I think even the owners themselves may not see a clear future outlook that can support such high valuations, so many of them are actually choosing to exit their ownership.

7. I believe that for now, since the "new share subscription" strategy has been very effective this year, this momentum will continue for a while. However, I think value will eventually return, and people will come back to common sense. (Source: Gelonghui)