Strong rise in technology stocks, frequent shifts in market style [Ping An Asset Management (Hong Kong) Weekly Market Review]

As of last Friday, the Hang Seng Index closed at 26,160.33 points, up 1.03% for the week; net inflow of southbound funds totaled approximately HKD 25.7 billion for the week. The CSI 300 Index closed at 4,728.6716 points, rising 1.99% for the week; the CSI 500 Index closed at 8,214.1939 points, up 3.07%, and the CSI 1000 Index closed at 8,307.4361 points, increasing by 3.87%.

With the strong rise in technology stocks over the past week, the US Nasdaq Composite Index closed at 26,672.42969 points, surging 6.20%, marking its 13th consecutive trading day of gains, the longest continuous rise since mid-2009. The S&P 500 Index closed at 7,126.06 points, rising 4.54% for the week. The Hang Seng Tech Index closed at 5,042.68 points, increasing by 3.87% for the week, while the Wind Technology Select HKD Net Return Index closed at 4,106.12 points, rising 5.43% for the week.

In terms of the performance of high-dividend theme market reference indices, the CSI Hong Kong Dividend Index closed at 4088.1294 points last week, up 0.90% for the week, while the Solactive Global Pacific Equity Select HKD Net Return Index closed at 2070.03 points, rising 1.35% for the week.

The money market fund sector is showing stability, with the latest quote for the US Secured Overnight Financing Rate (SOFR) at 3.67%.

Key market events:

Prospects for US-Iran negotiations remain unclear. According to a report by Iran's Islamic Republic Broadcasting on the 19th, citing Iranian sources, Iran currently has no plans to participate in the next round of US-Iran talks. Some Gulf states and European leaders believe a US-Iran peace agreement may take about six months to reach. Trump previously announced that Israel and Lebanon agreed to a 10-day ceasefire, but made no mention of Hezbollah. Facing midterm election pressure, Trump is attempting to sell his economic achievements to voters, referring to Iran as a minor issue. Over the past week, optimism for peace in the Middle East has driven US stocks to record highs. Last week, China’s President publicly commented on the conflict in Iran for the first time, pledging that Beijing will continue to play a constructive role in promoting peace talks.

The US Treasury sent letters to two Chinese banks, warning that support for Tehran could result in secondary sanctions. Additionally, the US Congress is planning to impose sanctions on Chinese entities accused of copying American AI models. Beijing reportedly pressured Spain to assist in blocking an EU proposal aimed at boosting the competitiveness of European companies. Following Orban's crushing defeat in Hungary’s election, European far-right parties now view Trump as a political liability, reassessing the costs of their close ties with him.

China’s housing price declines narrowed to the lowest in nearly a year. Economic growth rebounded more than expected in Q1, but retail sales and investment growth slowed. Moreover, March’s aggregate financing and new yuan loans were both below expectations, reflecting persistently weak demand from households and businesses. Export growth also significantly slowed in March due to seasonal factors and the impact of the Iran war. Bloomberg economists believe policymakers need to increase support, predicting that the People’s Bank of China will cut the reserve requirement ratio by 25 basis points this quarter.

The Federal Reserve’s Beige Book showed economic activity continued to grow in early April, with overall price increases remaining moderate. However, fuel costs rose notably across all districts, with inflationary pressures spreading beyond the energy sector. The New York Fed President stated that uncertainties are preventing policymakers from providing clear interest rate guidance, but a rate cut remains likely in the long term.

Additionally, Eurozone inflation for March was revised upward, surpassing the central bank’s target for the first time this year. Reportedly, European Central Bank policymakers prefer to hold steady this month while monitoring the impact of the Iran war. For the week, the Hang Seng Index rose by 1.03%. In terms of sectors, consumer discretionary contributed the most to the index, while financials weighed the most on it. Last week, southbound capital inflows amounted to approximately 25.7 billion Hong Kong dollars.

Key economic data:

On Thursday, US industrial production fell by 0.5% in March, compared to an expected rise of 0.1%.

On Thursday, the Philadelphia Fed's manufacturing index for April in the United States was reported at 26.7. The New York Fed's business activity index for April was reported at -14.0.

On Thursday, the number of initial jobless claims in the United States for the previous week was 207,000, compared to an estimate of 213,000.

On Thursday, data from the National Bureau of Statistics showed that real estate development investment nationwide reached 1.772 trillion yuan from January to March, a year-on-year decrease of 11.2%, with the decline widening by 0.1 percentage points compared to January-February; residential investment amounted to 1.3531 trillion yuan, decreasing by 11.0%, with the decline widening by 0.3 percentage points.

On Thursday, data from the National Bureau of Statistics showed that fixed asset investment nationwide (excluding rural households) from January to March totaled 10.2708 trillion yuan, increasing by 1.7% year on year. Private fixed asset investment decreased by 2.2% year on year. On a month-to-month basis, fixed asset investment (excluding rural households) grew by 0.52% in March.

On Thursday, data from the National Bureau of Statistics showed that industrial added value for enterprises above designated size increased by 5.7% year on year in March. On a month-to-month basis, industrial added value for enterprises above designated size rose by 0.28% in March compared to February. From January to March, industrial added value for enterprises above designated size grew by 6.1% year on year.

On Thursday, preliminary calculations indicated that the gross domestic product (GDP) for the first quarter was 33.4193 trillion yuan, increasing by 5.0% year on year based on constant prices, accelerating by 0.5 percentage points compared to the fourth quarter of last year.

On Wednesday, import prices in the United States rose by 2.1% year on year in March, compared to an expected increase of 4.4%; import prices increased by 0.8% month on month in March, compared to an expectation of a 2.3% rise. Export prices in the U.S. rose by 5.6% year on year in March, compared to an expected increase of 4.8%; export prices increased by 1.6% month on month in March, compared to an expectation of a 1.5% rise.

On Wednesday, the New York Fed's manufacturing index for April in the United States stood at 11, compared to an expectation of -0.5 and a previous reading of -0.2.

On Tuesday, ADP data showed that during the four weeks ending March 28, the average weekly increase in employment in the U.S. private sector was 39,250 people.

On Tuesday, data released by the General Administration of Customs showed that rare earth exports from January to March reached 32,077.1 tons, with an export value of 4.87 billion yuan, representing year-on-year increases of 30% and 159.9%, respectively.

On Tuesday, according to customs statistics, foreign-invested enterprises' import and export totaled 3.47 trillion yuan in the first quarter of this year, increasing by 16.1% year-on-year, marking growth for eight consecutive quarters. Both export and import growth rates reached double digits, with continued release of import-export vitality.

Key market news:

On Friday, the State Administration for Market Regulation imposed administrative penalties on seven platforms regarding the 'ghost takeout' case series, ordering rectification and suspending new cake shop additions for periods ranging from three to nine months.

On Friday, the National Development and Reform Commission (NDRC) and the Ministry of Transport are jointly leading the drafting of the '15th Five-Year Plan for the Development of a Modern Comprehensive Transportation System,' systematically planning relevant goals, tasks, and projects for the 15th Five-Year period.

On Friday, the NDRC announced plans to focus on sectors such as the digital economy, artificial intelligence, and commercial aerospace to introduce policies and reform measures to promote private investment, while also pushing for the expansion and efficiency improvement of infrastructure REITs.

On Friday, the NDRC stated that it would accelerate the allocation of central budgetary investments and ultra-long-term special treasury funds, and expedite the orderly release of 800 billion yuan in funding from new policy-based financial instruments.

On Thursday, New York Federal Reserve President Williams stated that the Federal Reserve is closely monitoring banks' exposure to private equity.

On Thursday, the US announced the launch of an operation codenamed 'Economic Fury,' applying maximum economic pressure on Iran through the Treasury Department.

On Thursday, the Ministry of Finance and the Ministry of Housing and Urban-Rural Development initiated the 2026 annual central fiscal support program for implementing urban renewal actions, providing fixed subsidies to selected cities through competitive selection and promoting the construction of urban renewal mechanisms.

On Thursday, Republican Senator Tillis publicly opposed Trump's threat to remove Federal Reserve Chairman Powell from his position and hinted at possible obstruction of related appointments.

On Wednesday, the IMF warned that the scale of U.S. Treasury issuance is eroding its 'safe-haven premium'.

On Wednesday, Trump stated that he does not intend to abandon the investigation into Powell and said that if Powell does not leave office on time, he will be fired.

On Tuesday, reports indicated that Kevin Warsh, the nominee for Federal Reserve Chair, has cleared the obstacles for Senate confirmation, with relevant senators stating they expect his nomination to be approved.

On Monday, the State Council announced the 'Regulation of the People's Republic of China on Countering Improper Extraterritorial Jurisdiction by Foreign Countries', which took effect immediately to safeguard national sovereignty, security, and the legitimate rights and interests of citizens and organizations.

The previous Saturday, the China (Inner Mongolia) Pilot Free Trade Zone was officially launched, covering three areas: Hohhot, Manzhouli, and Erlianhot, with several institutional innovation tasks being deployed.

The previous Friday, the Hong Kong Monetary Authority issued the first stablecoin issuer licenses to Dingdian Fintech and HSBC Bank, allowing them to issue stablecoins in Hong Kong, with plans to commence operations in the coming months.

Weekly Market Brief:

Although there was a temporary ceasefire in the Middle East conflict, the United States' involvement in blockading the Strait of Hormuz has posed significant challenges to maritime navigation. The conflict has also affected oil and gas production facilities, and the energy crisis remains unresolved, significantly impacting the global economy. The Q1 GDP data released last week was encouraging, and March industrial production exceeded expectations. However, export growth was lower than expected, while retail sales and unemployment figures were less than ideal, indicating weak economic momentum. Overall, the macroeconomic situation remains uncertain, and the outlook is not optimistic. Our country continues to implement moderate easing measures to sustain economic growth. Coupled with the recent implementation of subsidies and increased efforts in real estate policies, these are expected to provide robust support to the real economy. Nevertheless, corporate outlooks remain generally conservative. Sales in the real estate sector have not shown noticeable improvement, and developers continue to face cash flow pressures. The government has introduced multiple policies to boost market confidence and encourage long-term capital investment in the capital markets. Currently, the market still expects further policy stimulus in the short term. With significant breakthroughs by domestic companies in artificial intelligence, technology, and pharmaceuticals, Hong Kong’s growth sectors have shown strong performance at times. It will take time for policies to be formulated, implemented, and take effect. We believe that the short-term macroeconomic environment will continue to face pressure. The government has prioritized reducing real estate inventory by relaxing purchase restrictions and lowering existing mortgage rates to stimulate consumption. We believe these policies will have a positive impact on the economy. The macro environment continues to face numerous challenges, including the recent emphasis on anti-internal competition. We are closely monitoring whether there will be further policy support measures. Companies are still under operational pressure, and the path to recovery remains uneven. The country needs to maintain an accommodative monetary policy stance. Efforts to boost the economy are intensifying, with various measures being rolled out, including issuing special treasury bonds, moderately increasing fiscal deficits, and promoting economic activities in automobiles, real estate, infrastructure, and electronics consumption. Certain loan credit and credit enhancement measures for specific property developers will help stabilize corporate cash flows and fundamentals, though risks of defaults persist, especially among low-quality private developers and even state-backed enterprises. Overseas, recent U.S. data indicates economic volatility, with signs of weakening. Geopolitical events occur frequently, with conflicts between the U.S. and Iran disrupting commodities and financial markets. The U.S. announcement of relaxed chip and chip equipment exports to our country suggests some easing of trade tensions, but we anticipate that competitive relations between the two countries will persist for some time.

(Source: Bloomberg, Ping An Asset Management (Hong Kong) Co., Ltd.)

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