CITIC Construction Investment: Hong Kong stocks present the first buying opportunity after the Spring Festival

By | WenTao Huang Sheng He

Since February 2026, Hong Kong stocks have entered a rapid correction phase. The Hang Seng Index and the Hang Seng Tech Index have both fallen sharply, and the magnitude of the pullback in this period is significant. However, the bull-market pattern for Hong Kong stocks has not ended. This pullback is a typical mid-cycle adjustment within a bull market, not a trend reversal. This is precisely the first long opportunity of the year that is worth actively seizing. From a long-term trend perspective, this adjustment only challenges market valuations and short-term risk appetite, and has not shaken the core storyline of earnings recovery in Hong Kong stocks. From the perspective of overseas liquidity, TACO recently signaled marginal improvement, and there are signs that suppression from external liquidity and market sentiment has begun to ease. For institutional investors, left-side positioning conditions are already in place. If external shocks do not further escalate, Hong Kong stocks are likely to move out of the adjustment range and return to a sideways-to-upward channel of consolidation and uplift. The subsequent trajectory of this market cycle will also shift from valuation-driven in the early stage to earnings-driven going forward, with the main storyline focusing on structurally high-quality opportunities.

There are three core reasons behind the Hong Kong stock adjustment over the past three months. First is tighter liquidity expectations: the Fed’s leadership transition, combined with rising expectations of renewed inflation in the U.S., has led the market to cut back on rate-cut expectations. U.S. Treasury yields and the U.S. dollar index have strengthened, suppressing valuations for Hong Kong stocks—an offshore market type. Second is geopolitical risk and foreign investors’ risk aversion: an escalation of the Middle East conflict has pushed up oil prices and heightened concerns about inflation. Global risk-off sentiment has risen, and foreign capital has concentratedly reduced risk exposure in Asia-Pacific markets, making foreign outflows from Hong Kong stocks stand out. Third is crowded trading structure: in the prior period, capital piled into technology and internet sectors, resulting in high crowding. Under external disruptions, profits were taken and positions were cut first, creating a short-term negative feedback loop. This is a chip/positioning-level adjustment, not deterioration in fundamentals.

On a large-cycle view, Hong Kong stocks have already moved out of the low-valuation repair phase and have officially entered the middle-to-late stage of the bull market. The prior one-way broad rally across the board has ended. The market will fully pivot toward earnings-driven structural differentiation going forward, with reported performance and business momentum becoming the key standards for stock selection. On the trading side, a layered positioning strategy is used to fit a sideways-to-upward trajectory: build the base position while valuations are currently low, and accumulate core leaders in batches to lock in shares; once the position is confirmed, wait for earnings delivery and easing of external shocks—two major signals—before adding; use pullback positions to capture mispricings caused by risk events via a contrarian approach, strictly manage position sizing while balancing offense and defense, and avoid emotional trading.

In terms of allocations, internet and AI platforms are the first main line. High-liquidity tech leaders are the second main line. Innovative drugs and new consumption are the two most elastic sectors of improving momentum. Dividends/“red-chip” income strategies can only narrow the circle to select high-quality names, not participate with a broad-based rally mindset.

I. Introduction

In our December report last year,《Hong Kong stocks enter their last trading window of the year—“Market Strategy Thoughts” (No. 28)》, we pointed out that Hong Kong stocks would see a new round of upside (long) opportunities. After that, the Hang Seng Index hit new highs during the year-end cross-year rally last year. However, starting in February, Hong Kong stocks fell again, especially the Hang Seng Tech Index, which saw massive sell-offs. Many investors are somewhat confused about the outlook for Hong Kong stocks this year, with significant disagreement over whether the bull market in Hong Kong stocks can continue and how to choose investment directions. This article analyzes the situation from three dimensions: the macro environment, the capital environment, and the fundamental structure. We believe that Hong Kong stocks are still in a phase of interim adjustment in the ongoing bull-market process. External disturbances do not change the medium-term repair trend. The bull-market pattern in Hong Kong stocks is likely to continue, and there are clear investment opportunities ahead.

II. Main reasons for the recent adjustment in Hong Kong stocks

Fed leadership transition

The first stage of this market’s adjustment took place in late January. The core driver was expected policy turning resulting from the Fed’s leadership transition, which then triggered a global tightening of liquidity and rapidly increased market panic sentiment. Given that both the Hang Seng Index and precious metals are highly sensitive to U.S. dollar liquidity, both asset types topped and reversed at the same time, creating a high degree of synchronized movement. In the same period, U.S. technology stocks faced concentrated sell-offs amid dual concerns over AI-sector earnings and valuation. Market sentiment quickly spilled over. Foreign investors simultaneously reduced holdings sharply in Hong Kong’s internet core targets, causing the Hang Seng Tech Index to perform significantly weaker than the Hang Seng Index, highlighting a structurally differentiated pattern in Hong Kong stock sectors.

Geopolitical risk

Starting from February 2026, the second stage saw Hong Kong stocks experience a rapid, deep pullback. Both the Hang Seng Index and the Hang Seng Tech Index moved sharply lower in tandem, and market volatility expanded significantly. The recent rapid decline was mainly driven by geopolitical risk prompting foreign investors to concentrate sell off assets in the Asia-Pacific region. Among markets with high inflation sensitivity—such as those in Japan and South Korea—the impact was even more obvious. From a sector perspective, pressure on Hong Kong tech stocks was significantly greater than in other industries. Overall, the dual suppression driving this round of adjustment in Hong Kong stocks mainly comes from tightening global liquidity expectations and a rapid contraction in foreign investors’ risk appetite.

III. Does the foundation of a bull market in Hong Kong stocks still hold?

This long-cycle bull market in Hong Kong stocks was already established in the fourth quarter of last year. With systematic improvements in both domestic and overseas macro conditions, the overall pace is already at a mid-stage position. Looking at the three major cyclical drivers that move the market: currently, the liquidity cycle is the most leading. The valuation cycle has already followed with a significant shift. The earnings cycle has only just started, mainly driven by structural industry momentum repair.

Liquidity turns mainly toward domestic funds

Since the global easing cycle began, liquidity has continued to improve, and the probability of a return to tight conditions in the short term remains low. However, geopolitical conflicts are pushing up oil and gas prices, and the Reserve Bank of Australia’s rate hikes add uncertainty to global liquidity. Domestically, the economic recovery is moderate, and interest rates will stay low, while capital continues to allocate to Hong Kong Stock Connect dividend equity. Over the next two years, market liquidity will be driven by both domestic and overseas forces but will shift to being mainly supported by domestic funds.

Overall valuation levels are in the historical mid-to-upper range

From the valuation cycle perspective: over the past year, the market has shown a repair feature dominated by “rising valuations.” The current valuation repair process in Hong Kong stocks has been significantly realized. Looking back at Hong Kong stock performance: after nearly three years of bear-market adjustments, market valuations have been in an extremely undervalued range. Since the valuation-repair rally started, after more than a year of sustained recovery, valuations of most broad-market indices in Hong Kong stocks have climbed to historical mid-to-upper percentile levels.

Earnings cycle bottoming and rebounding

The earnings cycle is currently just rebounding from the bottom. Because China is still in a state of policy efforts taking effect, but economic improvement is relatively weak, the overall earnings repair pace in Hong Kong stocks will not happen quickly. At present, earnings repair mainly concentrates in structurally improving momentum sectors, and overall earnings repair in Hong Kong stocks remains relatively weak. From contributions by sub-industries, current earnings repair in Hong Kong stocks is still highly concentrated in a small number of industries. Interactive media and services, consumer categories largely including retail, insurance, telecom, and other financials are the main drivers of overall earnings improvement, while sectors such as oil and natural gas, coal, industrial support, autos, real estate, and construction are still the main drag sources—indicating that the rebound in earnings is still mainly structural improvement.

In this market cycle, the sustainability of repairs across different sectors in Hong Kong stocks has varied. One type of industry has repeatedly strengthened across multiple prior periods, with stronger continuity and more trend-like characteristics—for example, media and entertainment, consumer main retailers, other financials, semiconductors, and similar directions. These sectors benefit from momentum improvement and profit elasticity after low-base periods, and have become the key structural support for current earnings repair in Hong Kong stocks. Another type of industry has shown more phase-based repairs—for instance, industrial engineering, public transportation, textiles and apparel, tourism and leisure facilities, insurance, telecom, and software services. These industries may see clearly improved profits at some points in time, but their sustainability still needs further verification. More often, the improvement reflects short-term gains from policy support, cost improvements, or localized demand repairs. At the same time, a considerable portion of sub-industries has not yet entered a stable repair channel, so earnings pressure remains high.

From recent market performance, energy and chemicals are the most directly benefited direction in this round of external shocks. As oil prices rise, the market rapidly shifts capital toward the energy and resource chain. The sector’s cumulative gains have expanded significantly, and accelerated further after the conflict escalated. This shows the market is not universally weakening; instead, it is undergoing clear risk re-pricing. High-elasticity growth is under pressure, while resource- and inflation-benefit assets have strengthened. In the short term, as long as oil prices remain high, relative returns of energy and chemicals are likely to remain superior.

The recent weakness in the semiconductor sector is, in essence, not that the industrial logic has been disproven. Rather, rising oil prices and heightened external risk have suppressed market risk appetite, causing capital to temporarily avoid high-valuation and high-volatility tech stocks. Although some companies’ 2025 TTM profit growth has improved notably and industry momentum and earnings repair are still continuing, the short-term adjustment should be understood more as valuation compression under external shocks and a shift in trading order. Once oil prices fall and geopolitical risk eases, semiconductors should still be one of the most worth adding positions in again.

The innovative drug sector has generally performed better than some other high-volatility tech assets, but it has also clearly been affected by the overall decline in market risk appetite. The sector had accumulated a certain amount of rally in advance, suggesting that investors recognized its industrial logic and its capability to deliver earnings. However, after external shocks appeared, innovative drugs also faced phase-based profit-taking pressures. That said, unlike pure thematic trading, the sector’s subsequent repair relies more on fundamental delivery and company-level performance verification. Therefore, its adjustment is more a rhythm disruption rather than a trend reversal.

Overall, the earnings cycle, valuation cycle, and liquidity cycle that support the bull market in Hong Kong stocks will have weaker pull in 2026 than they did over the past year. Therefore, we believe Hong Kong stocks have already entered the middle-to-late stage of the bull market. This year is likely to be a mainly sideways market. Allocation thinking will gradually transition toward trading thinking. The focus should be on turnaround opportunities following each mid-cycle decline.

IV. Do the various types of participating funds in Hong Kong still have additional buying power right now?

From the perspective of capital structure, the main forces in the current Hong Kong stock market come from two types of entities: foreign investors and Southbound funds. Among foreign investors, capital can be further divided into trading-type funds and allocation-type funds. Southbound funds mainly consist of mutual funds and insurance funds.

Foreign investors’ participation this year may be weaker than in the past

First, allocation-type foreign capital is not the core incremental source for this round of Hong Kong stock market action. In recent years, Hong Kong stocks’ appeal to allocation-type foreign investors has been generally weak. On the one hand, after Trump returned to office again, geopolitical disruptions are expected to increase further, which would suppress the logic behind the allocation share of China assets in global portfolios. On the other hand, U.S. long-term Treasury yields remain high, so the relative allocation attractiveness of Hong Kong stocks versus Treasuries is not outstanding. Against this backdrop, allocation-type foreign capital’s participation in this round of the Hong Kong bull market has been overall limited, making it difficult to become the main force driving sustained upside in the market.

By contrast, trading-type foreign investors are the more decisive marginal capital in phase-based market moves in Hong Kong stocks. Unlike allocation-type foreign capital, trading-type foreign investors rely more on changes in global liquidity conditions and risk appetite. They typically concentrate inflows into Hong Kong stocks during windows when liquidity improves or risk appetite rises, but they also tend to withdraw quickly when conditions reverse. Therefore, such funds often determine the market’s short-term upside elasticity, while also amplifying market volatility.

Based on historical experience, over the past two years, several pulses of gains in Hong Kong stocks have been tightly related to the concentrated inflow of trading-type foreign investors.

1）May 2024: Foreign inflows driven by Asia-Pacific regional reallocation

At that time, Japan’s upside surprise rate-hike disruptions affected global capital allocation. The trading structure that the market previously bet on—Japanese monetary policy normalization leading to appreciation of both Japanese stocks and the yen—became looser. Some foreign investors, driven by hedging needs, temporarily flowed into the Hong Kong market, leading Hong Kong stocks to experience a pulse-style rally lasting more than a month. But as the Asia-Pacific reallocation logic gradually ended, the related funds returned quickly, and Hong Kong’s market cooled down accordingly.

2）September 2024: Policy expectations beyond expectations brought a resonance inflow of foreign and domestic capital

This rally was fundamentally a macro policy trade, mainly driven by stronger-than-expected reforms in China’s capital markets. At that time, domestic fundamentals had not shown clear improvement. The market was mostly pricing policy expectations and risk appetite repair. Foreign and domestic capital both concentrated inflows, pushing Hong Kong stocks upward quickly. But because a significant portion was trading-type foreign capital, after the pulse-style buying it also quickly realized profits, causing subsequent adjustment in Hong Kong stocks to be notably larger than that of A-shares after “924.”

3）July to October 2025: Fed rate cuts opened the global liquidity improvement window

Fed rate cuts brought marginal easing of global liquidity, prompting trading-type foreign investors to partially return to Hong Kong stocks, especially pushing the Hang Seng Tech Index to quickly set new interim highs. But as uncertainty in China-U.S. relations rose again, foreign investors’ risk appetite fell once more, and Hong Kong stocks entered an adjustment phase afterward.

Overall, trading-type foreign investors may flow into Hong Kong stocks quickly in the short term under certain drivers, but once the logic reverses, these funds will continue to sell. Therefore, the looseness/tightness of global liquidity and the degree of macro uncertainty determine the direction of these funds. At present, after the U.S. strategic shift westward this year, the direct impact of external factors on the China market is expected to decrease, which is favorable for Hong Kong’s risk appetite. However, because global liquidity remains constrained by inflation pressure, trading-type foreign investors’ contribution to Hong Kong stocks may be weaker than last year.

Domestic funds’ contribution is still mainly from insurance funds

Among all Southbound funds, insurance funds’ contribution to Hong Kong stocks has been the most important over the past two years. With domestic monetary policy staying relatively loose, domestic insurance funds must seek high-yield assets to address the problem of insufficient returns. Hong Kong dividend stocks are still the best choice. For the China interbank bond index (CIBM) rate, the stock-minus-bond yield spread between Hong Kong equities and bonds has been at historical highs over the past 2–3 years. For funds whose liabilities are tied to CIBM, the allocation attractiveness of Hong Kong stocks is extremely high. Although the domestic long-end yields have risen somewhat at present and the relative valuation attractiveness of Hong Kong stocks has declined, it still has investment value. In addition, after the policy side increased the equity allocation ratio for insurance companies in December 2025, insurance funds’ allocation demand has risen. Therefore, we expect this year will still be when insurance funds contribute the most to Hong Kong stocks.

Mutual funds’ current allocation ratio to Hong Kong stocks is already at a historical high. After the加仓 in Q1 2025, mutual funds continued to buy on dips in the following few quarters—for example, when Hang Seng Tech continued to fall earlier, Southbound funds kept buying to catch the lows. From an industry/sector perspective, mutual funds’ allocation preferences mainly concentrate in momentum sectors such as internet, high-end manufacturing, innovative drugs, and new consumption. But now mutual funds’ absolute allocation ratio is already relatively high, so this year they may not increase proportions in a systematic way like before. Still, each time Hong Kong stocks fall, they will become one of the supporting forces.

Overall, this year’s capital strength in Hong Kong stocks is insufficient to support a continued systematic bull market. However, there are still structural buying forces that can maintain the sideways market with an upward bias in the middle-to-late stage of the bull cycle. If there are macro tailwinds that are better than expected and cause a resonance inflow from both domestic and foreign capital, it is not excluded that Hong Kong stocks could make new highs again. But overall, it is still advisable to operate with a sideways-market mindset and buy after mid-term adjustments, requiring some timing.

V. Which directions in Hong Kong stocks are worth focusing on right now?

Among the long-cycle forces in Hong Kong stocks, both liquidity and valuation have already been realized to a large extent, leaving the earnings cycle still in a startup phase. Therefore, Hong Kong stocks’ pull is mainly expected to come from the earnings side. But currently, earnings across Hong Kong industries are highly differentiated, so careful selection is required.

Dividend investing must focus on high-quality names; a broad rally may be hard to sustain

With domestic long-end interest rates entering an upward channel and the momentum for economic recovery gradually showing up, the “bond-like” defensive attributes that Hong Kong dividend assets have in a low-rate environment will be somewhat weakened. Under this backdrop, the core logic for Hong Kong dividend investing will shift from broad-based rallies to focusing on high-quality targets with strong and sustainable dividend distribution, stable earnings, and high valuation safety-margin. The broad rally trend driven by earlier Southbound fund chasing may be hard to continue.

How does innovative drugs compare to last year?

The outbound BD (business development) overseas authorization heat in innovative drugs has continued to rise. Over the past two months, there have been 44 outbound authorization deals, with total deal value exceeding $53.2 billion. Among them, Innovent Biologics and Takeda Pharmaceutical reached a cooperation worth $11.4 billion; China Biologic Products and Sanofi agreed on a $1.53 billion deal. These large BD transactions all highlight the industry’s value. The implementation of the revised medical insurance and commercial insurance drug lists is expected to improve payment on the payer side. The innovative drugs industry has a dual-engine logic driven by both “BD overseas” and “payment expansion.” At the same time, after six consecutive months of sector adjustment and a return of valuations to more rational levels, high-quality Hong Kong innovative drug companies are expected to benefit from a value re-rating.

Industry distribution and selection for new issues in Hong Kong stocks

In terms of industry distribution for new listings, the current supply of IPOs in Hong Kong is clearly concentrated in high-momentum growth tracks. New consumption and innovative drugs dominate, followed by directions such as automobiles, technology applications, and pharmaceuticals/healthcare. Although hard-tech tracks such as AI, semiconductors, and robots have fewer in count, they have stronger attributes of industrial upgrading and valuation elasticity. Overall, the structure of this round of new Hong Kong IPOs has formed a clear main line of “consumption + biopharma + tech growth.” Going forward, screening for high-quality targets should pay even more attention to sector momentum, earnings realization capability, and the degree of valuation matching.

The new issues in Hong Kong stocks that are worth the most attention are those whose underlying tracks themselves have strong momentum, while the company also has unique investment attributes that A-shares find difficult to provide. The target names in the table mainly concentrate in high-momentum areas such as intelligent vehicles, artificial intelligence, robots, innovative drugs, vaccines, molecular diagnostics, and virtual asset transaction. Their common features are: first, the industry is still in a stage of technological breakthroughs, commercialization scaling up, or policy dividend release; second, the company’s business model, product form, or listing route has clear Hong Kong-specific exclusivity—if investors want to participate in related opportunities, they often can only do so via Hong Kong stock allocation; third, some companies have already shown revenue scaling up, order expansion, or improved profitability, and their growth potential is gradually being realized.

Core tracks for new issues in Hong Kong stocks—AI, intelligent driving, fintech, and bio-pharma—are central. The key points across these names focus on commercialization rollout, profitability improvement, and overseas expansion. From a market-cap structure perspective, valuation pricing for tracks such as virtual assets and robotics is higher. Market caps for bio-pharma and AI application-type names are relatively lower. This reflects differentiated market judgments about the certainty of commercialization across different tracks, and also highlights the investment main line of Hong Kong’s tech sector: “performance verification comes first.”

Internet sector still centers on performance verification

In the internet sector, in the short term, the focus should be on earnings repair for players such as Meituan after the pace of instant retail subsidy easing. In the mid term, focus should be on whether leading companies’ AI can deliver efficiency improvements in advertising, cloud, and e-commerce businesses, and on the sustainability of Bilibili’s commercialization inflection point. Overall, the opportunities in the sector come more from leading companies with steady core-business profits and gradual realization of new-business results.

For AI, investors should track the industry chain more directly

The Hong Kong AI investment main line is shifting from theme-driven catalysts to industrial execution and delivery. The allocation focus is also tightening from broad concept diffusion to key links in the industry chain. What is worth paying more attention to now is which company truly occupies an irreplaceable position across compute power, models, end-device carriers, and application deployment. Hong Kong has already formed a fairly complete AI mapping chain. For investors, the subsequent incremental returns are expected to come more from core companies with clear “chain position,” clear commercialization progress, and where earnings elasticity begins to release, rather than from broad-based rallies across the whole sector.

The Hong Kong AI sector has built an end-to-end layout of “underlying compute power, core technologies, hardware carriers, and industry applications,” covering core leader targets across each stage. From performance and event perspectives, top companies have continued to break through in large-model iteration, AI commercialization, and global expansion. The sector has a dual-engine drive of technology and performance. High industry momentum has been continuously validated, providing solid support for sector investing.

VI. The next long opportunity window has arrived

In the current market environment, Hong Kong stocks are facing a series of external shocks, especially the Iran-U.S. conflict and oil price volatility. However, recently the U.S. side delayed a military strike on Iran, which has significantly alleviated market concerns about escalation and released signals of marginal improvement. This means that in the short term, conflict risk is lower, and market sentiment may shift from panic-based adjustments to rational repair.

TACO node

According to the latest statements in March, the U.S. has postponed the military strike on Iran’s energy infrastructure, and the two sides have reached and will continue to advance a “constructive” dialogue. This signal indicates that near-term conflict has not further worsened, and market panic sentiment is gradually being repaired. For investors, this is a typical TACO Trade node—i.e., the market’s risk margin is stabilizing/softening, and it is a key moment for sentiment repair.

Short-term positioning

Because Hong Kong stocks are likely to continue in a sideways-to-upward pattern, investors need to focus on judging whether each round of adjustment reopens a positioning window. In the short term, the Middle East conflict and oil price upside still suppress market risk appetite. Whether there is an effective buy point now mainly depends on two conditions: first, external shocks ease at the margin; second, the liquidity repair trend in Hong Kong stocks continues. The first determines whether the market stops killing valuations, while the second determines whether, after risk appetite recovers, capital can effectively push a rebound. Based on the combined assessment, a buy point for positioning has already been established.

Mid-term key verification

From a mid-term perspective, April will be the key verification period for Hong Kong stocks to move from “sentiment buy points” to “earnings buy points.” The Q1 reports and full-year guidance of internet and AI leaders will determine whether this rebound can further upgrade from risk appetite repair into the main rally driven by earnings. Based on already disclosed performance, the core issue for internet leaders is not that fundamentals have deteriorated, but that the market previously had excessive concerns about external disturbances. Some companies have already provided relatively clear validation of revenue and profit. This indicates that the most important storyline assets in Hong Kong stocks still have solid earnings support. Therefore, as long as risk appetite continues to repair at the margin, it is almost a high-probability event that capital returns to internet and AI leaders. The internet sector should still be the top-priority allocation direction.

The best choice at this stage is not to take an all-in heavy position at once, but to advance with the rhythm of “first build a base position, then wait for confirmation, and add on pullbacks.” You can position with a base position first. If in April the Middle East conflict eases at the margin and oil prices fall from high levels, and meanwhile earnings validation for internet and AI leaders remains intact, then you should add to the confirmed position accordingly. If later market experiences a second adjustment again due to geopolitical rhetoric shifting back and forth, as long as the impact does not materially worsen, it should be treated as an opportunity to add, rather than a signal that the trend has ended.

Recent global capital allocation

Recently, there has been a marginal change in global capital allocation, and Hong Kong stocks have returned to the radar of overseas institutional investors. On one hand, Middle East capital shows signs of returning, and some funds that previously allocated to Singapore and Dubai are beginning to reassess allocations to Hong Kong assets, even considering increasing their positioning in Hong Kong through forms such as family offices. On the other hand, against the backdrop of geopolitical conflicts and high oil prices, the need for reallocation by Middle East sovereign funds and high-net-worth funds has increased. As Hong Kong stocks are the core host for “low valuations + China asset exposure,” they have strong appeal.

From a broader view of global capital flows, international hedge funds and long-term funds are also gradually replenishing their Hong Kong stock positions. Some global asset management institutions have started shifting capital from high-valuation markets such as the U.S. to more diversified global allocations, making Hong Kong stocks one of the important beneficiary directions. In addition, as the Hong Kong IPO market warms up and performance in sectors such as technology and resources improves, the participation of overseas “smart money” has clearly increased, reflecting a marginal improvement in risk appetite.

(1) Geopolitical risk. If China-U.S. relations are managed poorly, it could lead to an escalation in confrontation between China and the U.S. across political, military, technology, and diplomatic fields. At the same time, geopolitical hotspots such as the Russia-Ukraine conflict and Middle East issues may face the risk of worsening. If a crisis occurs, it may create adverse impact on the market.

(2) Overseas—Fed tightening beyond expectations. If the U.S. economy continues to maintain resilience and economic data such as labor markets and retail are strong, then the risk of U.S. recession may face repricing. Meanwhile inflation risks may also rebound. As the Fed continues its path to fight inflation through tightening, global liquidity easing may fall short of expectations, and the domestic equity market will inevitably face pressure on the “denominator” side as well.

(3) Domestic economic recovery or the effectiveness of stabilization-policy implementation falls short of expectations. If subsequent data on domestic real estate sales, investment, etc. fail to recover for a long time, the long-accumulated risks around local government financing platform debt repayment may become more acute. If economic recovery ultimately proves false, then the overall market trend will face pressure, and overly optimistic pricing expectations will need to be corrected.

Name of the securities research report: 《Hong Kong stocks gain their first opportunity to go long after the Spring Festival—“Market Strategy Thoughts” (No. 29)》

External release date: March 27, 2026

Report issuing institution: CITIC Securities Co., Ltd.

Report author/analyst:

Huang WenTao SAC No.: S1440510120015

SFC No.: BE0134

Sheng He SAC No.: S1440522090002

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