[Winning Strategy] Master Shen's latest target for the Hang Seng Index! Could it go beyond 40,000 points?! Are frequent record highs in US stocks signaling an impending downturn?

Guest of this episode: Shen Zhenying, Independent stock commentator

Will the saying 'Sell in May and Go Away' hold true this year?

The urban legend of Hong Kong's stock market, 'Sell in May and go away, but June is even worse, July will rebound,' is something everyone has surely heard. This phenomenon is partly related to market liquidity and the corporate earnings cycle — most companies finish announcing their results by March or April, so starting in May there are fewer catalysts to drive the market, making trading relatively weak. Additionally, many companies go ex-dividend in May, which leads to some stock price corrections. Although the 'May curse' doesn't always happen, it has become a psychological expectation in the investment community.

But will Hong Kong stocks break this 'curse' this year? Looking at recent performance, it’s been quite good. Early in May, the market surpassed 26,000 points, with multiple sectors showing strong performance. By early May, AI-related new stocks continued their strong momentum; for instance, Zhipu (2513) surged over 600%, while MiniMax (0100) and Xunce (3317) rose three to four times. In the chip sector, many stocks had already risen one to two times by May. The IPO boom, coupled with strong performances from AI and chip stocks, seems to have put the 'May curse' on track to be broken.

Master Shen: Low chance of a 'May curse,' Hang Seng Index ultimate target above 40,000 points

Master Shen believes that traditional sayings like 'Sell in May and go away' or 'May is poor, June is dire, July sees a rebound' have historically been accurate only about half the time. He noted that this month appears to be dominated by long positions because during the futures rollover and settlement period at the end of April, the market was kept low, so the chance of a 'May curse' happening is slim.

As for the Hang Seng Index target, Master Shen stated his view remains unchanged, with a target range of 29,000 to 30,000 points for this year, and an ultimate breakout definitely expected beyond 40,000 points. He emphasized that 40,000 points is just one milestone, with the ultimate goal being higher than that, whether it ends up being 41,000, 42,000, or 48,000 points.

You can subscribe to new stocks but avoid chasing high prices; look to lagging sectors like cement and real estate

The IPO boom continues, with all newly listed stocks in April performing well, earning as much as HKD 30,000 per lot. Master Shen suggests participating in new stock subscriptions as a form of lottery, treating any winnings as a bonus for tea money, but he does not recommend aggressively chasing high-priced stocks due to the risks involved.

AI and chip stocks remain dominant in the market, but if you’re looking to chase lagging sectors, Master Shen believes that cement and real estate might present opportunities. Real estate has been struggling for years, but with the push from national policies like the '15th Five-Year Plan' and efforts to stimulate domestic demand, it is expected to gradually improve. When real estate rebounds, the cement sector will benefit as well, especially given the numerous large-scale infrastructure projects underway, such as the Yarlung Tsangpo River project, which will significantly boost cement demand. Therefore, when considering sectors that may catch up, cement and real estate stocks should be on the list.

Is the US stock market far from a major correction? A gray rhino event could erupt anytime

The US stock market keeps hitting new highs, but does this really indicate a bright outlook? Master Shen disagrees. Geopolitical issues have yet to be fully resolved, but the market has rushed to rally, indicating that US stocks are 'running out of time.' Especially with the steep rise in the Nasdaq, the situation resembles the 'Hong Kong Stock Connect' period in 2007, when the Hong Kong stock market surged over 10,000 points in just two and a half months, and the current situation in the US market mirrors that.

At the same time, the yield on the US 10-year Treasury bond is gradually and slowly rising, and the increase in bond yields is quite unfavorable for tech stocks, which could lead to a rapid pullback in tech shares. Master Shen described the current situation as a 'grey rhino' — once it erupts, it will become uncontrollable like a charging rhino. Therefore, the Nasdaq (which represents tech stocks) is currently more risky than the Dow, and investors need to be especially cautious.

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