Institutional Outlook on Hong Kong Stocks in April: Positioning for Dividend Assets and Waiting for Market Recovery; Optimistic about Technology Sector Rebound

What are the deeper drivers behind the rebound in the AI sector and the technology sector?

Caixin Media April 3 News (Editor: Feng Yi) After a round of deep correction in March, the Hong Kong stock market has stabilized in the short term in recent days. With global macro volatility intensifying and changes in the geopolitical situation, a number of brokerage firms have released their April strategy outlooks.

Overall, the Hang Seng Index saw a cumulative decline of 6.92% in March; the Hang Seng Tech Index also saw a sharp adjustment in tandem, with a drop of 9.50% within the month. The technology sector was especially clearly constrained by external tightening factors.

In this regard, Zhejiang Securities International said that, at present, the fundamentals of the Hong Kong stock market remain relatively weak. In terms of policy, attention should focus on developing new quality productive forces and expanding domestic demand, while on the sentiment side, risk-avoidance sentiment dominates. At this time, the trend of the Hong Kong stock market at the weekly and monthly levels still remains in the right-side range. For the subsequent performance, even if there are twists and turns in the short term, the firm continues to maintain a cautious and optimistic attitude toward the market’s mid- to short-term outlook.

In terms of sector allocation, Zhejiang Securities International favors new energy, innovative drugs, and AI technology—industries that are relatively more resilient and benefit from policy tailwinds. It favors the undervalued state-owned enterprise “national champion dividend” sector, whose fundamentals and stock price performance are steady and that also benefits from policy tailwinds. It also favors Hong Kong local banks, telecom, and utilities dividend stocks, whose fundamentals are relatively independent and benefit from the interest-rate-cutting cycle.

Guangda Securities believes that investors should focus on the technology sector. At the index level, it suggests prioritizing allocations to Hong Kong tech-related ETFs to capture the sector’s overall rebound. For individual stocks, it focuses on the two main lines of “AI + platform.” Following the four-tier beneficiary chains above, it is to build positions in core targets with fast commercialization, solid cash flow, and valuations that remain at low levels. The April “golden stock” portfolio includes: Hongteng Precision (06088.HK), Huiju Technology (01729.HK), and Alibaba-W (09988.HK).

Jiaoyin International also analyzed that both ends of the “dumbbell” strategy are within the investment layout window, and that market style will transition from defense to a balance between offense and defense. With the double support from the fading of the geopolitical uncertainty risk premium and expectations catalyzed by the China-U.S. meeting between the heads of state, the previously oversold technology sector has room for mean reversion and repair. It suggests focusing on leading internet platforms whose valuations are still in the historical mid-to-low range and that continue to significantly increase share buyback and cancellation efforts; it also recommends watching AI application assets with industrial catalysts, intelligent driving, and other areas.

In addition, Jiaoyin International pointed out that if Middle East geopolitical uncertainty continues, high oil prices will still provide direct profit support to China’s mainland energy sector. Meanwhile, gold benefits from global risk-avoidance sentiment and pressure on U.S. dollar credit, so it maintains a strategic overweight allocation. Before external uncertainty has not been fully dispelled, high-dividend telecom operators, public utilities, and banks should still be held. Accordingly, it favors individual stocks such as ZhiFu Industry Trust (00778HK), Hesai Group (02525HK), CR Pharma (00013.HK), and Mengniu (02319HK).

Meanwhile, because war-related disruptions continue to unsettle the market, Guosen Securities prefers cyclicals and technology. It recommends that in April investors focus on real estate and energy companies with promising growth, such as KE Holdings (02423.HK), China Qinfa (00866.HK), and Power Development (01277.HK), as well as nonferrous companies with improving supply-demand fundamentals, such as China Hongqiao (01378.HK) and Innovation Works (02788.HK), among others.

In the technology stocks segment, Guosen Securities favors internet companies that benefit from AI model iteration and the improvement of the AI ecosystem, such as Alibaba and Tencent (00700.HK). It also includes auto manufacturers that will release major new products or move to mass production, and intelligent driving component companies, such as Leapmotor (09863.HK), Horizon Robotics (09660.HK), and Aptose Biosciences (01316.HK).

(Caixin Media: Feng Yi)