Since mid-January, the Hong Kong stock market has initiated a new round of strong performance, with trading activity once again approaching historical records. Southbound funds have accelerated their net inflow into the Hong Kong stock market, with a particular preference for the technology internet and financial sectors.
Looking ahead, Guotai Junan International Strategy believes that although the Hong Kong stock market has recently experienced an upward correction, the current valuation level of the Hong Kong stock market is at a relatively reasonable historical position and is not considered high. Currently, the Hang Seng Index PE-TTM is around 10.5 times, with a historical percentile of about 42%, which is below the average level of the past 10 years. In comparison to the valuation levels of major overseas stock indices, whether it is the S&amp;P 500 or the MSCI Emerging Markets Index, their valuation historical percentiles exceed 80%, far surpassing the valuation performance of the Hang Seng Index.
In the short term, the support from policy expectations for important meetings in March and the improvement in overseas tariff policy expectations have driven the rise of the Hong Kong stock market. DeepSeek's breakthroughs in the AI field have become an important catalyst for the initiation of this round of market rally. A moderately loose monetary policy and a more proactive fiscal policy will continue to support the economic fundamentals and prevent and resolve risks.
The gradual decline in overseas interest rates remains a certain trend, and the forces suppressing the Hong Kong stock market will gradually ease. Currently, the allocation ratio of foreign capital to the Hong Kong stock market is not high. As the main industrial line becomes clearer, investors will gradually reverse their pessimistic and conservative attitudes, and the Hong Kong stock market still has high allocation value.
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The Hong Kong stock market has rebounded strongly since mid-January, with trading volume approaching historical records. Southbound capital inflows are mainly concentrated in the technology and financial sectors. Guotai Junan International Strategy points out that Hong Kong stocks are reasonably valued, with the Hang Seng Index PE-TTM at approximately 10.5 times, lower than the average over the past 10 years. In the short term, policy expectations and improvements in overseas tariffs support the market, and breakthroughs in the AI field also drive the market. The proportion of foreign capital allocation is low, and as the main industry line becomes clear, investor sentiment will turn optimistic, making Hong Kong stocks highly valuable for allocation

- Since mid-January, the Hong Kong stock market has entered a new phase of strong performance, with trading activity nearing historical records.  
- Southbound capital has accelerated its net inflow into the Hong Kong market, particularly favoring the technology, internet, and financial sectors.  
- Despite recent gains, valuations remain reasonable, with the Hang Seng Index's PE-TTM around 10.5 times, suggesting that the market still holds significant investment value compared to higher valuations in major overseas indices.