CICC recently released its 2026 outlook for the Hong Kong stock market, stating that China's market performance in 2025 exceeded expectations across multiple dimensions, making it a veritable bull market. This was driven by tangible industrial trends (AI), fundamental improvements (post-September fiscal stimulus and private credit recovery boosting economic rebound in Q1 and Q2), and amplified narratives around liquidity (external de-dollarization and domestic deposit shifts). Notably, liquidity and sentiment played an even larger role, with the Hang Seng Tech Index's 30% surge almost entirely attributable to risk premium compression.

The 2025 market also exhibited unusual phenomena: 1) Divergent assets—gold, dividend stocks, and growth stocks—often rose simultaneously. 2) High concentration, with just 15 stocks contributing 70% of index gains while half underperformed. 3) Sharp sector rotation: internet stocks led in Q1, new consumption in Q2, biotech in Q3, and internet again in Q4—timing missteps could result in losses.

Looking ahead to 2026, the market’s drivers—liquidity narratives, fundamental recovery, and tech trends—will determine whether the rally sustains. Distinguishing temporary rebounds from enduring trends is key to gauging the bull market’s longevity.

CICC’s recommended Hong Kong stock picks include Lenovo (00992), Tencent (00700), and Baidu (09888).