Are HK and US Stocks Heading Toward a Divergence?
Trump’s recent CNBC interview shook the market when he threatened to impose heavy tariffs on goods from multiple countries, including China — with a shocking 100% tariff targeted directly at chips. The reaction was intense.
Surprisingly, US stocks didn’t fall; instead, they rallied. The Nasdaq hit a new all-time high, led by chip stocks charging ahead. Why? Because investors quickly interpreted this as a “domestic substitution” opportunity. US-based chip companies like $Macys(M.US)icron Technology $Micron Tech(MU.US) , $AMD(AMD.US) , and $NVIDIA(NVDA.US) ironically became short-term safe havens. Even if their rise might be “the last hurrah,” they attracted capital.
What about the Hong Kong market? Despite China’s July export data beating expectations with a 7.2% year-on-year increase, showing external demand is stable or even improving, the Hong Kong market remained weak. The reason boils down to one phrase: lack of money and lack of confidence — not enough enthusiasm to follow the trend.
The US Debt Crisis Isn’t Over
Market “confidence sources” remain shaky. The US Treasury recently warned that the borrowing limit could be hit as soon as early August. Without congressional approval of a debt ceiling increase, the US may default. Historically, these crises are resolved at the “last minute,” but the process still causes jitters. Emotion-driven markets like Hong Kong and Mainland China tend to “overreact” first.
Global Central Banks Out of Sync, Inflation Persists, Fed Holds Firm
On monetary policy, the Bank of England just made an emergency rate cut, but internal divisions mean further easing isn’t guaranteed. Meanwhile, the Fed is stubbornly holding rates to control inflation while fearing to choke the economy — creating extreme market uncertainty.
How Will HK and US Stocks Sync Up?
Put simply, US stocks are currently saying: “As long as I don’t lose faith, the rally can continue.” But valuations are very stretched now. Whether this high level holds no longer depends mainly on company performance but on the global geopolitical landscape.
On the other hand, Hong Kong stocks are priced like bargains, benefiting from export recovery, supportive policies, and gradual economic rebound. Yet, without capital inflows, the market remains defensive overall.
Trading Suggestions:
For US stocks, continue focusing on strong performers in the short term — such as AI chip makers, $Apple(AAPL.US) , $Microsoft(MSFT.US) , and Elon Musk’s ventures. However, avoid heavy exposure and consider scaling back positions gradually on stocks that have already risen significantly.
For Hong Kong stocks, watch for recovery opportunities during the mid-year earnings season, especially core assets like $SMIC(00981.HK) , which are boosted by chip sector tailwinds.
In Conclusion
This market phase is no longer a race of who is cheapest in valuation, but who can tell a story with a “global logic.” The US is holding up on its tech narrative, while Hong Kong is waiting for a resonance opportunity. Be patient. Don’t rush to chase highs. There will be market moves, but you need to first follow the script.
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