In a volatile market, capital is 'shrinking the circle'. Should we concentrate on AI, resources, or high dividends?

Olga: "Talking Finance": In a volatile market, capital is "shrinking the circle". Which sectors are they focusing on? We'll answer all the questions you care about. First, after capital stabilizes, it's selective and picky, not all in on every sector. Let's ask Sam Li Jiayuan from CITIC Securities, do you think the market capital feels this way now? "The market is shrinking the circle"?
Sam: Yes, but currently, the shrinking circle is more obvious in the US stock market, not the Hong Kong market. The US Nasdaq (tech stock index) has almost recovered its losses, and the A-share Shanghai Composite is about to return to the 4000-point mark. In contrast, the Hong Kong market, especially the Hang Seng Tech Index (HSTECH), is still a bit weaker overall. Today's Hong Kong market turnover was only about 100 billion plus. Considering the US market performance, I give it a failing grade—opening high and closing low, with limited gains.
This shows that when capital was shrinking the circle before, it prioritized shrinking into the US market or other markets. Sector differentiation in Hong Kong is very clear. Over the past five days, some sectors have hit new highs, such as Kingboard Laminates ($KB LAMINATES(1888.HK)) (Kingboard Group, AI hardware-related PCB/laminates), ASMPT ($ASMPT(522.HK)) (semiconductor equipment, traditional auto parts + AI second growth curve), and other companies on the AI hardware chain (commonly known as the AI Three Treasures or AI Three Lobsters concept in the market).
Olga: Right, Kingboard Laminates ($KB LAMINATES(1888.HK)) is a very old-school building materials/ceramics stock in Hong Kong. Traditionally making electronic components, now linked with AI, especially printed circuit boards (PCB), seen as part of the AI hardware chain, hence the hot money speculation.
Sam, can you explain in more detail why these companies can be hyped up? Many friends might not be familiar with the details.
Sam: In this era of tech explosion, it's impossible to master everything, but the key is to remember the logic and conclusion. These traditional companies originally served the real economy, and people thought their growth had peaked. But with AI development, it was suddenly discovered that certain parts of their business (e.g., PCB, semiconductor equipment) are essential, creating a "second growth curve." The market therefore re-rates them, going from stable but unexciting to having a new story.
Stocks like $KB LAMINATES(1888.HK) and $ASMPT(522.HK) are typical examples. They still have traditional businesses (e.g., auto parts), but the AI concept has significantly boosted their valuation. Of course, it's good if you catch them at low levels, but chasing highs carries big risks—because the first curve is still affected by the traditional economy. If market sentiment turns sour (e.g., worries about recession), volatility will be more intense.
Olga: Understood. In the short term, if you want to bottom-fish in Hong Kong stocks, there are roughly two strategies:

Continue treasure hunting: Under the premise of a shrinking circle, look for hot speculative thematic stocks that capital will prioritize rushing into, such as $KB LAMINATES(1888.HK), which has an AI hardware story.
Return to heavyweights: If there's a major global stock market rebound (US Nasdaq about to break its peak), heavyweight stocks like Tencent (0700.HK), Alibaba (9988.HK), etc., the so-called ATM (Alibaba, Tencent, Meituan), have a high probability of rebounding, although the bounce might not be as big as small caps, the win rate is higher.
Sam: Yes, in the short term, these are roughly the two threads. The first one doesn't necessarily have a high win rate, but the bounce could be strong; the second has a high win rate, but the odds are relatively limited.
Olga: Let's look at your questions. First, say hi to the new friends joining! Someone asks, what does "shrinking the circle" mean?
It's gaming terminology (like PUBG), where the safe zone shrinks over time, and you have to keep moving to the new safe zone, or you get eliminated. In the stock market, it's a metaphor: capital is shifting from being dispersed to being concentrated, rotating short-term into certain "safe" or hot sectors.
Olga: Someone asks about Meituan (3690.HK), and someone else asks if Xiaomi (1810.HK) will go below 30? Also, a new user asks which of the two strategies is more recommended? And carry asks about Xiaomi.
Sam: Speaking generally first, everyone cares about these star tech stocks.
The help from a US market recovery for Hong Kong depends on the extent of the recovery. If it's just a mild rebound, there might still be a siphon effect (capital first replenishing core US positions). Only if Nasdaq breaks its peak and the "ghost stories" suppressing the market (recession, rate hikes, etc.) weaken, will there be a clear driving effect. Then, the rebound force in Hong Kong stocks (especially the heavily suppressed HSTECH) could be very strong.
Olga: We observed that the long position with the most capital inflow over the past five days was Tencent (0700.HK), about 30 million over five days (not particularly high, around the historical median), but 12 million just yesterday, showing signs of warming up. Many people use high-leverage products to bet on a rebound, such as Tencent call warrant 16040 (leverage close to 13x, strike price around 530, price around 2000, low entry fee, near-the-money).
Reminder: When using leverage, control your bet size. Gains are leveraged, but so are losses.
Sam: Xiaomi (1810.HK) is not necessarily the first choice for a short-term rebound—its technical chart is relatively weak (downtrend channel), weaker than Geely, BYD, and even some mobile phone component stocks. If you're betting on a rebound purely because it has fallen a lot, I'm against it. This logic isn't scientific (you'd keep buying all the way down to 30 thinking it's cheap).
Meituan (3690.HK) is a bit better than Xiaomi. If that big bullish candlestick (anti-internal competition news) is seen as a turning point, technically both bulls and bears have opportunities. It's currently oscillating in a high-volume congestion zone (around 85-90).

Bullish on Meituan: You can watch 26116 (leverage about 7x, strike price 97.88).
Bearish on Meituan: You can watch 20793 (strike price about 82.88, high delta, more sensitive).
This is a bull-bear battleground now, you can watch for entry points.
Olga: A new user asks if there are any surprises among recently listed new stocks (AI-related semi-new stocks)? Also, how to position HSBC (0005.HK) short-term? Will the Q1 report on May 5th be affected by the Middle East conflict?
Sam: HSBC (0005.HK) is very strong short-term, already has some floating profit. If you positioned calls before, now it's near recent highs, you can consider taking profits and moving capital to other opportunities. Don't stubbornly hold on, consider the win rate. It has deviated from the 10-day moving average for a while, short-term there's divergence risk. The quarterly report will reflect the Middle East impact, but it adjusted in March, be careful chasing at this level.
Standard Chartered (2888.HK) is relatively weaker than HSBC (higher Middle East exposure), but if you're betting on a laggard catch-up, or if international bank stocks perform decently, you can follow. For leverage products, you can refer to 27202 (about 6x leverage, near-the-money).
Olga: A viewer asks about Pop Mart (9992.HK)?
Sam: Pop Mart (9992.HK) is a 50-50 bet short-term. Duan Yongping mentioned it but didn't say he bought. Fundamental analysis is difficult (it's about belief), short-term volatility is high. Recently, short covering pressure has been heavy, with short squeeze support for the rebound, but chasing highs or shorting at this level both carry high risk, purely betting on probability.
Olga: Finally, a follow-up from last time: In an uncertain market, which sectors does capital flow into? Resource stocks or high-dividend stocks?
Sam: Last time we talked about resource stocks, aluminum stocks (e.g., some related to EVs, energy storage) performed differently because they are seen as essential at the national security level. Now, if you're betting on a major global rebound and weakening economic ghost stories, traditional resources like copper stocks might rebound more strongly (the rebound magnitude is still limited now, margins are safer).
For high-dividend/yield sectors (Hong Kong also uses this term), domestic insurance stocks are worth watching (e.g., China Life Insurance (2628.HK), China Pacific Insurance (2601.HK), etc.). Their past pattern often shows success-type moves. If the current level is the bottom, the pullback won't be too deep. Q1/Q2 market sentiment warming up helps short-term capital. Domestic bank stocks moved a lot before, rotation back to domestic insurance stocks is also possible.
Olga: See you next Tuesday.