*Ng Lai-hin: Recent U.S. stock market trend to be mainly downward adjustment*
Currently, U.S. bond yields remain high, with the 10-year yield briefly rebounding to pre-financial crisis levels. Combined with rising oil prices, global stock markets are under pressure. The three major U.S. indices recorded notable declines. Ng Lai-hin, Securities Strategist at Everbright Securities International, told the Economic Daily Correspondent that high bond yields could lead to some funds flowing back from equities to bonds, affecting global market liquidity and keeping U.S. stocks under high pressure. However, he believes the claim that "the U.S. stock market will experience another disastrous downturn" is overly exaggerated. U.S. market liquidity remains strong. Although the three major indices have retreated from their peaks, the pullback has not been substantial, reflecting high resilience in U.S. stocks.
Ng expects the recent trend in U.S. stocks to be primarily downward adjustments, with limited upside potential during rebounds. However, he sees no immediate factors sufficient to trigger a "disastrous downturn." He also warns that high bond yields represent a structural issue, not a short-term phenomenon. Given the massive U.S. debt and structural economic challenges, investors demand higher returns to hold U.S. bonds, suggesting yields will remain elevated for the long term and continue pressuring global equity markets.
*Tech and internet stocks attractive in medium to long term*
Hong Kong stocks saw a significant pullback today, with the Hang Seng Index briefly falling nearly 500 points. Tech and internet stocks faced notable selling pressure: Tencent (00700) dropped 1.1% to HK$433.6; Alibaba (09988) fell 2.5% to HK$107.3; Xiaomi (01810) declined 3.5% to HK$25.64; Kuaishou (01024) dropped 3% to HK$29.58.
Ng believes today's decline in Hong Kong stocks was mainly dragged by high U.S. bond yields. Meanwhile, as President Xi's visit to the U.S. nears its end without significant positive news, the market is selling off earlier gains driven by optimism over the Xi-Biden meeting, dragging down the Hang Seng Index. Technically, the index briefly broke below last week's low of 24,357, suggesting further downside in the short term. Tech and internet stocks, being highly correlated with the broader market, are expected to continue weakening in the near term.
The key now is whether the market can hold the March low around 24,200. If it holds, the "head-and-shoulders bottom" pattern could still form; if it breaks, the index may test the 24,000 level. Ng suggests investors focus on more defensive sectors recently. Mainland Chinese banks and utility stocks offer stable operations and dividends, providing stronger downside resistance. For more aggressive investors, innovative pharmaceutical stocks could be a strategic choice—for example, the WuXi group has shown strong momentum recently, rising against the market today; BeiGene (06160) has also demonstrated relatively stable performance.
Additionally, although short-term pressure on tech and internet stocks remains, they are still attractive in the medium to long term. Ng believes some tech and internet stocks could be accumulated at lower levels when prices fall further—for instance, Tencent around HK$410 or HK$400, and Alibaba near HK$100, both offering medium- to long-term investment value. (am)
| Stock (Code) | Current Price (HK$) | Change (%) |
|---|---|---|
| Tencent (00700) | 433.6 | Down 1.09% |
| Alibaba (09988) | 107.3 | Down 2.45% |
| Xiaomi (01810) | 25.64 | Down 3.54% |
| Kuaishou (01024) | 29.58 | Down 3.02% |
| CCB (00939) | 9.5 | Down 1.86% |
| BOC (03988) | 5.965 | Down 1.24% |
| Towngas (00003) | 7.035 | Down 2.02% |
| Power Assets (00006) | 59.05 | Down 1.58% |
| WuXi AppTec (02359) | 208.8 | Up 1.85% |
| WuXi Biologics (02269) | 53.2 | Up 2.5% |
| BeiGene (06160) | 215.2 | No change |
