Guotai Junan Securities Hong Kong Stock March Strategy: The decline in US Treasury yields and DeepSeek's deployment will drive the expansion of Hong Kong stock valuations

According to the Zhitong Finance APP, Guosen Securities released a research report stating that with the decline in U.S. Treasury yields and the launch of DeepSeek, Hong Kong stocks have benefited from both liquidity and fundamentals. The target range for Hong Kong stocks has been raised to 23,000-25,000 points by 2025.

Sector-wise:

1. AI-related industry chain: With the release of DeepSeek, Chinese internet companies have also welcomed a new era of AI, with several enterprises deploying large models, which will benefit the growth of cloud computing, domestic computing power, and downstream applications; the four relevant GICS secondary industries are media (internet), semiconductors, software, and technology hardware and equipment;

2. Automotive and parts: This is a high-growth industry, and autonomous driving has opened up future software valuation space;

3. Finance and high dividends still have good long-term allocation value under the backdrop of loose monetary policy.

Guosen Securities' main viewpoints are as follows:

Expectations for U.S. interest rate cuts have surged.

On February 28, the Atlanta Federal Reserve adjusted the U.S. Q1 GDP to -1.5%, which has temporarily raised market concerns about economic growth, with expectations for rate cuts in 2025 surging to nearly three times.

It is expected that the inflation data for February, to be released in March, will fall to 2.8, better than previous data. It is inclined to believe that the upward trend of U.S. stocks has not ended, and with the Federal Reserve's rate cuts and the still robust earnings of listed companies, it is expected to regain upward momentum in March.

The open-source and large-scale deployment of DeepSeek has far-reaching significance.

From open-source models to open-source tools, DeepSeek demonstrates strong technical capabilities, robust technical confidence, and an open mindset. This is not only a milestone in China's AI large model phase overtaking the U.S., but also proves China's technological innovation capabilities as a major country in AI development and application;

DeepSeek can provide good support for domestic computing power such as Huawei Ascend chips. In the future, as this adaptation becomes closer, Chinese AI chip companies can break the U.S. technological blockade with this hardware + software combination, and even further surpass it; DeepSeek's low cost will greatly lower the application threshold for many enterprises, promoting the AI application process in China and even worldwide.

Risk Warning: Uncertainties in geopolitical situations, uncertainties in U.S. tariff policies, uncertainties in the extent of overseas interest rate cuts, and uncertainties in the competitive landscape of certain industries