China Merchants International: Hong Kong stock valuations have returned to a reasonable level, and the market is expected to face significant resistance at the 25,000-point mark
Zhang Haonen, the investment director of CITIC Bank (International), stated that the Hong Kong stock market will continue to focus on Sino-U.S. talks in the short term, and it is expected that the 25,000-point level will face significant resistance. Although the Hong Kong stock market has risen more than 20% this year and valuations have returned to reasonable levels, the Federal Reserve may not cut interest rates in June, and the market lacks factors for downward speculation. He is optimistic about the prospects of large technology stocks and believes that the price war in the electric vehicle industry is unsustainable, with future profits depending on the market positioning of companies
According to the Zhitong Finance APP, Zhang Haoren, the investment director of personal and business banking at China CITIC Bank (International), pointed out that the Hong Kong stock market will continue to observe the news from the China-U.S. talks in the short term, and the Federal Reserve may not cut interest rates in June. Additionally, the Hong Kong stock market has risen over 20% this year, and valuations have returned to relatively reasonable levels. It is expected that the market will consolidate sideways in the short term, with significant resistance at the 25,000-point level.
He noted that there are no bearish news in the market, and it is still observing the China-U.S. talks, lacking factors for downward speculation. However, the Federal Reserve may not cut interest rates in June, with the earliest possible cut being in July or even September. Coupled with the fact that U.S. Treasury yields remain relatively high and U.S. stock valuations are rising, the market is concerned about debt and de-dollarization, leading to funds recently returning to European and Asian stock markets, where valuations have now returned to reasonable levels.
Zhang Haoren is also optimistic about the prospects for technology stocks, believing that large technology companies have a complete ecosystem and industrial chain, which is beneficial for corporate profits. In the future, whether in hardware or software industries, if profits mainly come from AI-related aspects, they are expected to go further. Therefore, leading technology stocks are unlikely to be underestimated, while some small and medium-sized stocks with overly high valuations should be approached with caution.
The Ministry of Industry and Information Technology of China and the China Association of Automobile Manufacturers have successively opposed price wars in the automotive industry. Officials have also mentioned that companies should not engage in blind competition but should "advocate high-quality development." Zhang Haoren believes that price wars in the industry are not a sustainable direction, but some car companies still show significant growth in gross profit margins and net profits, simply because they have put considerable effort into brand innovation.
He admitted that electric vehicles are indeed a global trend, and the concern lies in whether the aforementioned added value can be realized, which depends on the market positioning of individual companies. He also mentioned that referring to the history of the Japanese automotive industry, after domestic competition, car companies will need to consider overseas markets, and whether profits can continue to be maintained will be another focus for the industry
