CITIC Securities: The market trend of short-term expansion of Hong Kong stock valuation may continue.

CITIC Securities research report stated that the uncertainties in overseas markets, combined with downward revisions in performance expectations for individual industries in the Hong Kong stock market, as well as some macroeconomic data in April falling short of expectations, have led to a recent pullback in the Hong Kong stock market since May 14. However, liquidity in the Hong Kong stock market remains relatively abundant, with average daily trading volume staying above HK$250 billion. On May 15, there was a net inflow of HK$24.96 billion from the Southbound trading link, the highest since March 23 this year. With the MSCI quarterly rebalancing at the end of May potentially bringing incremental funds into the Hong Kong stock market, as well as ongoing negotiations in the Sino-US economic and trade fields, the short-term trend of Hong Kong stocks expanding in valuation may continue. However, starting from June, attention should be paid to the pressure on market liquidity from the lifting of trading restrictions. In terms of industries, it is recommended to focus on: 1) technology sectors such as internet, semiconductor, and robotics that have already adjusted performance expectations; 2) consumer sectors with expectations of hitting bottom in terms of fundamentals, low valuation, and high dividends; 3) energy, telecommunications operators, and utilities that may benefit from the spreading of dividend trading in the Hong Kong stock market.