CICC's chief overseas and Hong Kong stock strategist, Liu Gang, has expressed a continued expectation for the broad-based indices of the Chinese and Hong Kong stock markets to remain in a sideways consolidation, particularly for the Hong Kong market.

He explained that the direction of the broad-based indices in China and Hong Kong is largely aligned with the domestic credit cycle, and with CICC anticipating a volatile domestic credit cycle, this will constrain the overall index movement space for the Chinese and Hong Kong markets.

CICC previously forecasted that the central level for the Hang Seng Index is approximately 26,000 points, and this view remains unchanged.

Liu Gang further stated that the valuation of the Hang Seng Tech Index is currently very low, leaving relatively little room for significant further downside. From a valuation perspective, the Tech Index is not a bad trade, though its upside potential is constrained by fundamentals.

Liu Gang elaborated that for the Tech Index to become a good trade, it would require a substantial improvement in corporate earnings, policies favoring consumption stimulus, and significant efforts by internet giants in AI investments.

Additionally, a rapid decline in US Treasury yields would help lower overall financing costs, which would also be beneficial for the Tech Index.

Despite this, Liu Gang believes that following its previous correction, the Tech Index now offers value in terms of risk-reward.

For investors with less stringent cost requirements, such as long-term funds like insurance capital, it may still be possible to gradually allocate to the Tech Index, as these investors have the capacity for long-term investment to await returns.

However, for investors like mutual funds that pursue relative returns, investing in the Tech Index would involve opportunity costs even if the index neither rises nor falls.

When asked why Hong Kong's tech giants, despite actively deploying in AI development, have still underperformed their global peers, Liu Gang attributed this to the relatively mediocre recent performance of global hyperscale cloud service providers, noting that the recent rise in the US stock AI sector has been primarily in hardware stocks.

He also mentioned that, drawing from US experience, the advantage in the AI industry lies in B2B (business-to-business), whereas many Hong Kong tech giants are concentrated on AI applications, which is B2C (business-to-consumer).

Furthermore, for the internet giants listed in Hong Kong, the food delivery competition still has some lingering potential impacts.