After Tencent and Alibaba announced their earnings, the Hang Seng Tech Index narrowly held above 4,900 points

Tencent Holdings (00700.HK) and Alibaba (09988) both announced earnings slightly below market expectations, repeatedly dragging down the Hang Seng Tech Index. On the morning of March 20, the Hang Seng Tech Index narrowly held above 4,900 points, closing at 4,911 points, down 1.7% at midday, with a turnover of HKD 41.3 billion. Alibaba plunged 5.76%, and Xiaomi Group (01810.HK), which recently announced new cars, dropped 6.94%.

Industry insiders believe that after the earnings reports from these two internet giants, most of the risk in the Hang Seng Tech Index has been released. The next focus will be on the performance of Meituan (03690) and Xiaomi Group, which will announce earnings next week. The ongoing tension in the Middle East remains a negative factor that needs time to be digested. The Federal Reserve kept interest rates unchanged, with limited chances of rate cuts this year. In the short term, continued risk release will further lower valuations, highlighting the medium- and long-term investment value of the Hang Seng Tech Index.

Guotai Securities International strategist Wu Lixian told Yicai that after the major tech stocks announced earnings, their stock performance was relatively weak, dragging the Hang Seng Tech Index lower. As constituent companies release results, short-term negative news is further digested by the market. However, tech stocks still face uncertainties from the Middle East situation, with high oil prices significantly impacting interest rates. Previously, the Hang Seng Tech Index touched around 4,750 points at its lowest. Around 4,800 points may serve as a better support level. From a medium- to long-term perspective, tech stocks still have opportunities to perform this year, with valuations gradually becoming more attractive.

Li Zeming, Chief Investment Officer of Blue Water Capital Management Limited, said that Tencent, Alibaba, and Xiaomi dragging the index down suggests that most short-term risks have been released. Both Tencent and Alibaba have fallen to key support levels. Alibaba’s decline was due to a gap between its earnings and market expectations, while Xiaomi’s early earnings release next week has partially released risk. The Hang Seng Tech Index should have good support around 4,800 to 4,900 points. Further short-term declines are limited, but more risks remain in the long term, as the market worries that investments related to artificial intelligence may not meet expectations.

Li Zeming also expressed concern that the ongoing tension in the Middle East is gradually affecting various industries. Risks are being released as oil prices rise, but the longer the delay, the higher oil prices go, gradually impacting specific economic and livelihood projects, such as increasing costs for refining and chemical companies. Overseas, this directly affects gasoline prices, raising inflation and constraining monetary policy.

On the early morning of March 19, the Federal Reserve announced that the federal funds rate target range would remain at 3.5% to 3.75%, in line with market expectations. Market observers believe that the current US-Israel-Iran conflict has pushed up international oil prices and heightened inflation concerns, forcing the Fed to adopt a cautious stance on future monetary policy.

CICC analyst Liu Gang stated that this Fed meeting might be the most conflicted and difficult one: on one hand, non-farm payroll data shows the job market is beginning to feel pressure; on the other hand, the highly uncertain Iran situation makes it difficult to accurately assess inflation impacts. With no signs of easing in Iran, the meeting lacked enough dovish signals to offset the upward pressure on oil prices, resulting in a hawkish market reaction.