Hang Seng Technology fell 9.5% in March, institutions outlook for April investment opportunities | Hong Kong stock monthly view

Ask AI · Which investment directions are institutions optimistic about in April?

21st Century Business Herald Reporter Xiaoxia

On April 7, Hong Kong stocks were closed for Easter; from April 8 (Wednesday), trading will resume normally.

Looking back at March, the Hong Kong stock market saw a clear pullback. The Hang Seng Index fell 6.92% over the month, with a turnover rate of 8.06%. The Hang Seng Tech Index performed even worse, dropping 9.50% for the month. On the previous trading day (April 2), the Hang Seng Index fell further to around 25,000 points, while Hang Seng Tech fell to 4,679.1 points. With both major indices declining at the same time, overall market risk appetite fell.

From a capital-flow perspective, Wind data shows that in March, southbound funds recorded total net purchases of 54.602 billion HKD. The data indicates that during the market adjustment, some mainland funds chose to buy the dips, mainly flowing into financial and energy blue-chip stocks.

In terms of sectors, in March, traditional value sectors in the Hong Kong market were relatively resilient to downside moves, while technology growth sectors faced significant pressure. On the one hand, escalating geopolitical tensions intensified the market’s risk-avoidance sentiment; on the other hand, some technology stocks faced pressure from valuation adjustments.

Traditional industries and defensive sectors led in gains. The electrical equipment sector led with a gain of 13.64%; the oil and natural gas sector rose 6.17%, reflecting the support from energy prices amid tightened geopolitical conditions. The automotive sector rose 5.38%.

Technology and consumer-related sectors saw relatively large declines. The leisure goods sector had the biggest drop, reaching 34.40%; the air passenger transport sector fell 30.44%, possibly due to the double blow from tightened geopolitical tensions and rising oil prices; the semiconductor sector fell 21.89%.

Among leading stocks, CATL led the way with a gain of 23.69%. China Petroleum and China National Offshore Oil each rose 12.68% and 10.58%, respectively. Among bank H-shares, Bank of China and Industrial and Commercial Bank of China rose 7.11% and 6.36%, respectively. However, Alibaba-W fell 16.73%, Tencent Holdings fell 6.56%, and HSBC Holdings fell 12.27%.

Looking ahead to April’s investment opportunities in Hong Kong stocks, multiple institutions have issued their views.

On April 6, Guoxin Securities said that allocation should be considered across three directions: energy, high yield, and performance. Since the situation in Iran has continued and the outlook remains unclear, three variables—crude oil prices, the US dollar index, and US Treasury yields—are all being priced toward a stagflation-like scenario, and the short-term earnings of the technology and automotive sectors are still being revised downward. It therefore suggests that Hong Kong stock allocation should lean more toward the three directions mentioned. First is energy, new energy, and beneficiary directions; second is the direction with steady cash flow and robust dividends; third is the direction with upward earnings revisions, such as non-ferrous metals, innovative drugs, and exports.

On April 2, Zheshang International said that the fundamental picture for the Hong Kong stock market in April is still relatively weak, and the liquidity environment has also eased somewhat. On the policy front, focus should be on new productive forces and expanding domestic demand, while on the sentiment front, risk-avoidance sentiment is dominant. For sector allocation, it is bullish on new energy, innovative drugs, and AI technology, among others; it favors undervalued state-owned enterprise dividend sectors; and it also highlights Hong Kong local bank, telecom, and utilities dividend stocks, which have relatively independent fundamentals and benefit from the rate-cut cycle.

On March 31, Fuguo Fund said that for Hong Kong stock allocation, attention should be on dividend sectors with steady operations and stable cash flow. The innovative drug sector is expected to perform well. In addition, alternative sectors that benefit from rising international energy prices may overlap with external-demand chains such as electric and new energy (lithium mining and new energy vehicles).

On March 31, CMB International said that in April, the two main areas affecting Hong Kong stocks are liquidity and fundamentals. In terms of liquidity, the first priority is to monitor changes in the US-Iran situation. It is expected that the likelihood of conflict will gradually weaken within the month, but risks of a pullback in the meantime still remain. Pay attention to whether the Federal Reserve’s statements include a more hawkish tone. On fundamentals, in April, the release of Hong Kong stock earnings reports is concentrated in industries with high dividends and low valuations. In terms of direction, it suggests focusing on companies related to the “Agent” concept, and in particular avoiding the possibility that new energy vehicle performance may fall short of expectations due to subsidy withdrawal.

Galaxy Securities said that it is recommended to allocate first to Hong Kong technology ETFs to capture the sector’s overall rebound. For individual stocks, focus on the “AI + platform” dual main lines, follow the four-layer beneficiary chain mentioned above, and build positions in core targets with fast commercialization, solid cash flow, and valuations at low levels.

On subsequent key events to watch, April will enter a concentrated period for Q1 earnings disclosures, including Suning Express—DRS (April 9), Tianli International Holdings (April 10), Lens Technology (April 15), Bay Area Development (April 17), and others. At the same time, it is necessary to continue monitoring the Middle East situation, including navigation conditions in the Strait of Hormuz. The development of the geopolitical situation directly affects global energy markets and the prices of risk assets.