Tianfeng Securities According to the released research paper, Hong Kong shares have led to a relatively significant rebound against the background of the substantial improvement of domestic and foreign capital sentiment. The subsequent sustainability and rising space need more consolidated fundamental data to cooperate with it, and the cautious and optimistic attitude remains in the verification period of economic recovery. In the US stock market, under the benchmark assumption of a soft landing of the US economy and continued easing of the financial condition index, the US stock market may maintain an upward trend in the medium term, but there may be signs of overheating in the market sentiment in the short term, so the US stock market can be kept phased cautious.

The main viewpoints of Tianfeng Securities are as follows:

Hong Kong stock market: favorable policy implementation drives market sentiment up

1) Hong Kong stocks continued to rise strongly, with the property sector leading the market. From May 13 to 17, the real estate policy combination continued to make efforts. Following the complete cancellation of housing purchase restrictions in some major first tier cities last week, the Central Bank issued a centralized real estate support policy on May 17, involving important measures such as guaranteed delivery of buildings, interest rate reduction, and down payment reduction. The HSI hit a new high in the year, driven by the optimistic expectations of the early market and the favorable implementation of policies.

In terms of style, Hang Seng Technology and the overall market value factor rose by more than 3.5%, and momentum style was relatively low; At the strategic level, the smart index of Shanghai Shenzhen Hong Kong Stock Connect AH shares rose significantly by 4%, superior to risk control and multi factor strategy; At the industry level, the real estate construction and information technology industries led the market, both recording returns of more than 6%, and the energy sector, which had a large increase in the previous period, fell 2.5%;

2) Real estate risks may be effectively mitigated. Recently, the regulatory authority announced a new round of real estate easing measures, which may play a certain role in boosting the interest in buying houses in major cities in the short term. The bank believes that the follow-up market will pay more attention to land purchase and house destocking, and assess whether the recent support policies of the central bank can break the negative cycle of the industry;

3) The stronger Hong Kong dollar exchange rate has improved external financial conditions. According to the theory of interest rate parity, the low interest rate currency will depreciate and appreciate in the future against the high interest rate currency. However, although the spot exchange rate of the Hong Kong dollar dropped to a low of 7.84 from the 7.81 level at the beginning of the year, it has entered the appreciation channel since the middle of April. At present, it is at the 7.80 point. The Hong Kong dollar swap in the same period of 3 to 12 months also kept appreciating in general, The spot and forward exchange rate curves together show that overseas investors are gradually increasing their demand for the allocation of Hong Kong assets. Considering that the Hong Kong dollar has shown a more obvious risk aversion in the current Asian currency devaluation, the Bank believes that short-term domestic and foreign capital may still maintain a net inflow to Hong Kong stocks;

4) In the future, Hong Kong shares have led to a relatively significant rebound against the background of the substantial improvement of domestic and foreign capital sentiment. The subsequent sustainability and upside space need more consolidated fundamental data to cooperate with it. During the verification period of economic recovery, Hong Kong shares remain cautious and optimistic. In terms of allocation, public utilities, energy, finance, telecommunications and other sectors with high dividend yield in the short term are expected to provide considerable relative returns in this environment even if the market volatility increases in the future; In the medium and long term, the technology industry represented by semiconductor and Internet will still be the main focus of industrial transformation, which is expected to benefit from government support and domestic substitution.

The US stock market: the deviation between the US stock market and the expected market indicators has intensified

1) The US stock market rose again, and the technology sector performed well. The US inflation data in April was basically in line with market expectations. FedWatch showed that the probability of the Federal Reserve's interest rate cut in September was increased to 65%, which boosted the US stock market to continue its upward trend. From May 13 to 17, the three major stock indexes once reached a new historical high; In terms of style, high overseas earnings, ESG and growth factors rank first, while dividend and high buyback style are relatively backward; At the strategic level, style rotation is superior to GARP and multi factor combination; At the industry level, the science and technology sector represented by information technology (+2.9%) and communication services (+1.7%) also showed outstanding performance. Real estate and health care also showed impressive performance. Only industry and optional consumption recorded negative returns;

2) The process of disinflation in the United States is still bumpy. The six-month month on month discount rate of the super core CPI and the core CPI still maintained an upward trend, reflecting the strong demand of the US service industry. In the future, it should be noted that with the decline of the base period data, the rate of inflation decline may further slow down. Superimposed on the easing effect of the strengthening of the US stock market on the financial condition index, the possibility of secondary inflation in the US may still be high, and the space for the Federal Reserve to cut interest rates may be limited within the year;

3) The deviation between the relative fundamentals of US stocks and market expectations further intensified. From 2023Q4, Citigroup's economic surprise index continued to fall, indicating that the actual performance of the economy was lower than the market's general expectations. At present, the deviation between the index and the S&P 500 is gradually widening, and the current rise of the US stock market is more driven by non fundamental factors. In addition, combined with the S&P 500 index expected by mainstream analysts, it implies that there is about 4% downward space for the index. In view of the fact that in history, the implied return of the index is mostly positive (the number of bearish is relatively small), which indicates that the current rise of US stocks also exceeds most analysts' expectations. Although the above deviation phenomenon does not mean that the market will weaken rapidly, it points out that the market may be in an irrational state, and it can be properly cautious in the short term;

4) In terms of investment strategy, under the benchmark assumption of a soft landing of the U.S. economy and continued easing of the financial condition index, the U.S. stock market may maintain an upward trend in the medium-term dimension, but there may be signs of overheating in the market sentiment in the short term, so the U.S. stock market can be kept phased cautious. In terms of industry configuration, first, if the subsequent manufacturing PMI confirms the upward trend, the cycle sector represented by energy and raw materials may show some performance; second, the AI industry trend is still in the verification stage, and focus on the configuration opportunities of some scientific and technological segments.

Risk warning: overseas liquidity is rapidly tightened; The risk of a hard landing of the US economy; The international situation is complicated.