The Hang Seng Index opened down 0.69%, while the Hang Seng Tech Index fell 0.72%. On the market, the lithium battery sector continued its strong performance, with Tianqi Lithium Corporation rising nearly 3% and Ganfeng Lithium Group Co.,Ltd. gaining over 1%. New energy vehicle stocks also advanced, with NIO Inc. up over 2% and XPeng Inc. rising nearly 1%.
Regarding the outlook for Hong Kong stocks, Huatai Securities noted that the tail risks from geopolitical tensions decreased significantly last week, leading to some recovery in market sentiment. The initial rebound was rapid, primarily driven by short-term trading strategies. The focus is on sectors that previously saw deep declines and were heavily impacted by sentiment and expectations of U.S. Federal Reserve tightening, such as technology and Hong Kong local financial stocks. However, a sustained, index-level reversal following the rebound may face challenges, as geopolitical conflicts could continue to cause volatility. The market is watching to see if a sustained rally, similar to the one following the tariff disputes last April, can be achieved. However, current conditions differ in two key aspects: first, replicating the liquidity environment from early last year, characterized by a significant drop in global financial conditions indicators like the U.S. dollar and low positioning of southbound funds in Hong Kong stocks, is difficult; second, last year's tariff disputes primarily impacted risk appetite while exports remained resilient, but if upstream "hard gaps" persist medium- to long-term, fundamentals could be affected. Therefore, for the medium term, it is advised to continue allocating to low-volatility dividend stocks and adjust the portfolio structure based on changes in domestic and external demand.
GF Securities stated it is optimistic about a rebound opportunity in Hong Kong stocks in the second quarter, particularly in April-May, though this is not seen as a full reversal. This view is based on three negative factors being priced in: first, the completion of annual report disclosures, with uncertainties regarding earnings, share buybacks, and capital expenditures already digested; second, the end of the March peak in share unlockings, with the scale of unlocks declining in Q2, potentially providing an opportunity for negative sentiment to clear; third, easing overseas liquidity pressures, with expectations for a visit by former U.S. President Donald Trump potentially boosting sentiment, while rate cut expectations have diminished to zero. After geopolitical and inflation disturbances are absorbed, there is room for valuation repair.
Industrial Securities expressed that despite potential ongoing fluctuations in the geopolitical situation, April could present a window for bullish positions in Hong Kong stocks. Factors include a short-term shift in global equity markets from risk-off back to risk-on; as safe-haven sentiment and oil prices peak and decline, the U.S. dollar is likely to reverse its previous overly pessimistic pricing related to geopolitical uncertainty and liquidity tightening; and the releases of Tencent's Hunyuan and DeepSeek large models, along with expectations surrounding important meetings and a potential Trump visit, could help reverse the pessimistic expectations currently reflected in Hong Kong stock valuations.
CITIC Securities indicated that with signs of easing conflict in the Middle East, Hong Kong stocks may see a return of domestic and foreign capital. The current dynamic P/E ratios for the Hang Seng Index and Hang Seng Tech Index are 10.9x and 17.8x, at the 57th and 31st percentiles historically, respectively. Investors may also begin pricing in the expectation of Trump's potential mid-May visit. After full adjustments in fundamental expectations, coupled with potential policy catalysts from the "15th Five-Year Plan" period, it is judged that Hong Kong stocks could experience a valuation expansion in April-May.