Morgan Asset Management: Performance period dominates Hong Kong stocks' August trend; Federal Reserve's delay in interest rate cuts is beneficial for risk assets
Morgan Asset Management strategist Zhou Huan Tong expects that Hong Kong stocks will experience a brief consolidation in August, with performance being a key factor. Despite the Hang Seng Index falling 3.5% last week, large bank stocks and the Federal Reserve's interest rate direction will influence market volatility. She believes that the Federal Reserve's delay in interest rate cuts is beneficial for risk assets, especially AI-related technology stocks. As more overseas investors focus on the mainland China and Hong Kong stock markets, the electric vehicle and biotechnology sectors will also benefit
According to the Zhitong Finance APP, the Hang Seng Index fell for four consecutive trading days last week, dropping 881 points or 3.5% for the week. The performance of large bank stocks and the direction of U.S. interest rates have become the main factors affecting market fluctuations. Morgan Asset Management's global market strategist, Zhou Huan Tong, expects that Hong Kong stocks may experience a brief consolidation as they enter August, with the performance of large-cap stocks becoming crucial. She believes that the market's predictions for interest rate cuts are continuously changing, which may affect the stock market in the short term. However, even if the Federal Reserve delays interest rate cuts until December, it would demonstrate that the U.S. economy can avoid recession and alleviate long-term pressures, which is a favorable factor for risk assets. It is expected that after the Federal Reserve's interest rate meeting, the performance of large-cap stocks will become the focus, with technology stocks related to artificial intelligence (AI) continuing to be a key area.
She also stated that she is optimistic about the Asian AI industry benefiting from the rise of DEEPSEEK, and even the current electric vehicle and low-altitude economy sectors are utilizing AI concepts. The valuations of related stocks in mainland China and Hong Kong are currently reasonable and supported by policies, presenting growth opportunities in the future.
In addition, she mentioned that more overseas investors are recently paying attention to the stock markets in mainland China and Hong Kong, pointing out that changes in mainland consumption patterns are favorable for offshore Chinese concept stocks, particularly in the electric vehicle, mobile phone, and transportation-related sectors, which have the greatest potential for growth. The biotechnology sector has been continuously rising recently, and she indicated that as major companies in Europe and the U.S. show interest in collaborating with mainland biotech companies, the industry is expected to benefit from the theme of mainland brands going international, which is also one of the reasons for her positive outlook on the medium to long-term trends of the stock markets in mainland China and Hong Kong
