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HK Stock Market Barometer | Super Earnings Week for HK Stocks!
Fullgoal Hong Kong
joined discussion · Jul 20 14:42

Weekly Market Outlook – Weekly Market Strategy Report

1. Hong Kong equity market performance: Divergent index movements, with southbound capital flows providing key support
· Major indices showed divergent performance:
· Top-performing sectors: Consumer Staples (+4.55%), Real Estate & Construction (+4.28%), Energy (+4.17%)
· Underperforming sectors: Industrials (-3.81%), Information Technology (-3.09%), Healthcare (-1.85%)
· Fund flows: Southbound capital (Stock Connect) recorded net purchases of HK$36.98 billion last week, maintaining net inflows exceeding HK$10 billion for multiple consecutive days, serving as a key source of incremental market liquidity
1. Hong Kong Market Performance: Indices Diverge, Southbound Flows Provide Key Support • Major indices showed divergence: • Best-performing sectors: Consumer Staples (+4.55%), Properties & Construction (+4.28%), Energy (+4.17%) • Underperforming sectors: Industrials (-3.81%), Information Technology (-3.09%), Healthcare (-1.85%) • Fund flows: Southbound capital (via Stock Connect) recorded net purchases of HK$36.98 billion last week, maintaining daily net inflows exceeding HK$10 billion for multiple consecutive days, serving as the primary source of incremental funding for the market 2. Macroeconomic Outlook: External Factors – U.S. Inflation Eases, Alleviating Rate Hike Concerns • June U.S. inflation data came in broadly below expectations: • CPI declined by 0.4% month-over-month, marking the largest drop since April 2020 • Year-over-year CPI rose 3.5%, down from 4.2%; Core CPI fell to 2.6% from 2.9% Driven primarily by falling energy prices; PPI also declined in tandem · Market Impact: • July Fed rate hike expectations have cooled significantly • U.S. Treasury yields declined, supporting valuation recovery in Hong Kong equities and serving as the main driver behind last week's market rally · U.S. Economic Resilience: • June retail sales met expectations, rising 0.7% month-over-month excluding gasoline stations • Initial jobless claims fell to their lowest level since early May, indicating a robust labor market • The likelihood of a 'soft landing' for the economy has increased · Risk Factors:Middle East...
1. Hong Kong Market Performance: Indices Diverge, Southbound Flows Provide Key Support • Major indices showed divergence: • Best-performing sectors: Consumer Staples (+4.55%), Properties & Construction (+4.28%), Energy (+4.17%) • Underperforming sectors: Industrials (-3.81%), Information Technology (-3.09%), Healthcare (-1.85%) • Fund flows: Southbound capital (via Stock Connect) recorded net purchases of HK$36.98 billion last week, maintaining daily net inflows exceeding HK$10 billion for multiple consecutive days, serving as the primary source of incremental funding for the market 2. Macroeconomic Outlook: External Factors – U.S. Inflation Eases, Alleviating Rate Hike Concerns • June U.S. inflation data came in broadly below expectations: • CPI declined by 0.4% month-over-month, marking the largest drop since April 2020 • Year-over-year CPI rose 3.5%, down from 4.2%; Core CPI fell to 2.6% from 2.9% Driven primarily by falling energy prices; PPI also declined in tandem · Market Impact: • July Fed rate hike expectations have cooled significantly • U.S. Treasury yields declined, supporting valuation recovery in Hong Kong equities and serving as the main driver behind last week's market rally · U.S. Economic Resilience: • June retail sales met expectations, rising 0.7% month-over-month excluding gasoline stations • Initial jobless claims fell to their lowest level since early May, indicating a robust labor market • The likelihood of a 'soft landing' for the economy has increased · Risk Factors:Middle East...
II. Macroeconomic Outlook: External Factors – U.S. inflation cools, easing rate hike concerns
· June U.S. inflation data came in broadly below expectations:
• CPI declined by 0.4% month-over-month, marking the largest drop since April 2020
• Year-over-year CPI rose 3.5%, down from 4.2%; Core CPI fell to 2.6% from 2.9%
Driven primarily by falling energy prices; PPI also declined in tandem
· Market implications:
• Expectations for a Fed rate hike in July have significantly cooled
The decline in U.S. Treasury yields supported a valuation recovery in Hong Kong equities, serving as the primary driver behind last week's market rally.
• The U.S. economy remains resilient:
• June retail sales met expectations, rising 0.7% month-over-month excluding gasoline station sales.
• Initial jobless claims fell to their lowest level since early May, reflecting a robust labor market.
• The likelihood of a 'soft landing' for the economy has increased.
• Risk factors:Escalating geopolitical tensions in the Middle East could push up energy prices, potentially reversing the current disinflation trend and affecting the Federal Reserve’s policy path.
III. Domestic factors: Industrial production and exports remain solid, while domestic demand remains weak.
• Overall economy:
• Q2 GDP grew 4.3% year-over-year; H1 growth came in at 4.7%, within the full-year target range.
· Positive factors:
• Industrial value-added output rose 5.3% year-over-year in June, indicating resilient production-side activity
• Exports (denominated in USD) surged 27.0% year-over-year in June, driven by semiconductors, data processing equipment, and automobiles
· Weak spots:
• Total retail sales of consumer goods rebounded to a 1.0% year-over-year increase in June
• Fixed asset investment declined 5.7% year-over-year in H1, with real estate investment down 18.0%
• New yuan loans and total social financing in June fell short of expectations, reflecting weak credit demand from the real economy
· Market interpretation: Weak domestic demand remains the primary concern, but this also strengthens market expectations for upcoming pro-growth policy measures.
IV. Outlook
· Two key themes:
Overseas: The U.S. inflation downtrend is becoming increasingly evident, raising expectations for a dovish policy shift and improving global liquidity, which supports valuation recovery in Hong Kong equities.
Mainland China: The economy remains in a modest recovery; progress on pro-growth policies and interim earnings performance will be key drivers for sector trends.
· Fund Flows: Continued southbound capital inflows are expected to persist.
· Risk Warning: Geopolitical tensions could trigger oil price volatility, leading to market fluctuations.
V. Future Investment Allocation Strategy: Focus on three main themes
·  Defensive Allocation
Sectors: High-dividend sectors such as energy and utilities
Rationale: Stable cash flows and relatively high dividend payouts make them suitable as defensive components of a portfolio; they may also benefit from rising commodity prices amid geopolitical tensions.
·  Earnings Certainty Theme
Consumer Staples: Valuations are at historical lows, and earnings tend to remain relatively stable in a weak recovery environment.
Technology growth: The long-term industry logic is clear, mid-term earnings realization is relatively strong, and valuations have become gradually attractive following recent corrections. Investors may consider leading companies with global competitiveness.
·  Policy- and catalyst-driven themes
Real estate and construction sector: May benefit from valuation recovery driven by ongoing pro-growth policy measures.
Innovative pharmaceuticals: Valuation pressures have largely been relieved after prior corrections. Coupled with catalysts such as R&D progress and overseas expansion, their long-term allocation value is gradually emerging.
6. Key macro events to watch next week
1. Hong Kong Market Performance: Indices Diverge, Southbound Flows Provide Key Support • Major indices showed divergence: • Best-performing sectors: Consumer Staples (+4.55%), Properties & Construction (+4.28%), Energy (+4.17%) • Underperforming sectors: Industrials (-3.81%), Information Technology (-3.09%), Healthcare (-1.85%) • Fund flows: Southbound capital (via Stock Connect) recorded net purchases of HK$36.98 billion last week, maintaining daily net inflows exceeding HK$10 billion for multiple consecutive days, serving as the primary source of incremental funding for the market 2. Macroeconomic Outlook: External Factors – U.S. Inflation Eases, Alleviating Rate Hike Concerns • June U.S. inflation data came in broadly below expectations: • CPI declined by 0.4% month-over-month, marking the largest drop since April 2020 • Year-over-year CPI rose 3.5%, down from 4.2%; Core CPI fell to 2.6% from 2.9% Driven primarily by falling energy prices; PPI also declined in tandem · Market Impact: • July Fed rate hike expectations have cooled significantly • U.S. Treasury yields declined, supporting valuation recovery in Hong Kong equities and serving as the main driver behind last week's market rally · U.S. Economic Resilience: • June retail sales met expectations, rising 0.7% month-over-month excluding gasoline stations • Initial jobless claims fell to their lowest level since early May, indicating a robust labor market • The likelihood of a 'soft landing' for the economy has increased · Risk Factors:Middle East...
Risk Warning:
This document is for informational purposes only and does not constitute an offer or solicitation to buy or sell any investment products, nor does it provide any advice or recommendations. The information contained herein has not taken into account your specific investment objectives, financial situation, or personal needs and should not be relied upon as a substitute for professional advice. You should seek independent professional advice before making any investment decision.
Investment involves risks, including the possible loss of principal. Past performance does not indicate future fund returns. The value of fund units may go up or down, and future returns are not guaranteed. Investors should read the fund's offering documents, including its prospectus and risk factors, before investing. You may obtain the Hong Kong offering information for the fund at the following website: https://www.fullgoal.com.hk/en (the content of this website has not been reviewed by the Securities and Futures Commission).
This material is issued by Fullgoal Asset Management (Hong Kong) Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong. Certain information in this document is sourced from third parties believed to be reliable; however, we make no representation or warranty as to its accuracy, completeness, or timeliness.
The above information is for reference only. If you intend to purchase relevant fund products, please pay attention to investor suitability management regulations, complete a risk assessment in advance, and purchase fund products with a risk rating that matches your own risk tolerance.
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Risk Disclaimer: The above content only represents the author's view. It does not represent any position or investment advice of Futu. Futu makes no representation or warranty.Read more
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