Zhang Yidong: The phase of Hang Seng Tech experiencing the harshest valuation cuts has passed; it is now time to "shed tears and sow seeds."

Why does Zhang Yidong have a positive outlook on the long-term allocation value of Hong Kong stocks?

As of the end of March, under external shocks, the Hang Seng Tech Index has been particularly volatile, facing dual blows from external liquidity tightening and the disillusionment of the AI narrative. After a continuous sell-off, investors in the Hang Seng Tech ETF Huaxia (513180.SH) and the Hang Seng Internet ETF Huaxia (513330.SH) have faced the dilemma of whether to “average down” or “cut losses.” However, many institutions have recently suggested: the most severe phase of valuation reduction is over, and it is now advisable to “sow seeds with tears.”

Zhang Yidong, a member of the Executive Committee of Haitong International, Chief Economist, and Head of the Research Department, recently predicted: the peak impact of this war on global investors in terms of psychology, valuation, and risk premium has passed. The TACO trading is expected to restart as early as the beginning of April.

Zhang Yidong expressed that he is very optimistic about Hong Kong stocks. Similar to A-shares, after the U.S.-Israel-Iran war, Chinese assets will have more attractive allocation value. The correlation between A-shares, Hong Kong stocks, and U.S. stocks has significantly weakened trend-wise over the past few years. In a turbulent and fragmented world, achieving wealth preservation is very appealing through lack of correlation, and after this war, Chinese assets will welcome a decent wave of foreign capital allocation.

He believes, the long-term outlook for Hang Seng Tech remains optimistic, but there is insufficient momentum in the medium term. In the short term, at this position, he suggests treating Hang Seng Tech as a consumer stock to buy, and as a convertible bond to purchase, which is worthwhile. “With a heart of compassion, sow seeds with tears,” don’t have expectations that are too high for it, but also don’t cut losses at this time.

Related ETFs:

Hong Kong flagship index Hang Seng Tech — Hang Seng Tech ETF Huaxia (513180.SH)

Leading internet stocks in Hong Kong — Hang Seng Internet ETF Huaxia (513330.SH)

Alibaba + Tencent + Xiaomi weight exceeds 40% — Hong Kong Stock Connect Internet ETF Huaxia (520910.SH)

Hong Kong special technology all coverage: Internet + semiconductor + new energy vehicles + innovative medicine — Hong Kong Stock Connect Technology ETF Huaxia (159101.SZ)

Daily Economic News