Cathay Pacific Haitong: Capital headwinds have not been resolved, Hong Kong stock dividend defense first
The Zhitong Finance App learned that Cathay Pacific Haitong released a research report saying that uncertainties such as short-term AI narratives, geographical conflicts, and the US midterm elections are still to be observed. Overseas risk aversion is heating up, and the adverse financial situation of Hong Kong stocks has yet to be digested. At the industry level, emphasis continued to be placed on high-dividend assets in Hong Kong stocks in the fourth quarter. At the same time, the three quarterly AI application scenario expansion/Q3 may be included in the flexible target of the Hang Seng Technology Index.
Cathay Pacific Haitong's main views are as follows:
Asset performance: Hong Kong stock dividends closed sharply in the last week, with petroleum and petrochemicals, coal, and banks leading the way. From a global perspective, major market industry performance correlations are weak. Hong Kong stocks and A-share defense sectors such as energy, finance, and utilities have performed better, and information technology and materials are underperforming.
Macro liquidity: Overseas liquidity expectations have tightened in the last week. Judging from the central bank's policy, the situation in the Middle East has been worsening in the past week. Combined with the US core PCE in September, it hit a new high since May 2026, and market interest rate hikes have rebounded somewhat. Judging from expectations of interest rate hikes, the market expects the Federal Reserve to raise interest rates once each in December this year and April next year.
Micro-liquidity: 1) Inflow items: Net southbound outflow this week, net inflow of foreign capital. In the past week, there was a net outflow of capital of HK$11 billion to the south, mainly reducing optional consumer retail, hardware and pharmaceuticals; net inflows of foreign capital, and international intermediaries mainly increased their holdings in hardware, pharmaceuticals and optional consumer retail. 2) Outflows: Hong Kong stock IPOs accelerated this week, with a net reduction in industrial capital holdings. The Hong Kong stock IPO raised about HK$10.7 billion in the past week; the overall capital holdings of the Hong Kong stock industry decreased by HK$11.6 billion in the past week, compared with a net reduction of HK$9.5 billion last week.
Market sentiment: Hong Kong stock short selling sentiment declined and volatility declined this week. Judging from short selling sentiment, the Hong Kong stock Hang Seng Index's short selling sentiment has declined in the past week, and Hengke's short selling sentiment has increased. Daily consumption and real estate short sales account for the biggest decline. Compared to A shares, the AH premium/turnover/turnover rate/risk premium of Hong Kong stocks compared to A shares shows that the relative sentiment of Hong Kong stocks has strengthened marginally.
Microeconomic climate: Hong Kong stock earnings expectations have recently been revised upward. Hong Kong stocks are about to enter the three-quarter report disclosure period. Judging from analysts' unanimous expectations, the Hang Seng Index's EPS profit forecast for 2026 has been revised in the past week. By sector, profit expectations for the Hong Kong stock industry, finance, and non-essential consumption have improved. There are obvious revisions in essential consumption and real estate construction.
Valuation Positioning: Hang Seng Technology's valuation is still low from a medium term perspective. As of 2026/10/30, the Hang Seng Index/Hang Seng Technology PE was 10.2/20.0 times, respectively, with a rolling 3-year historical fraction of 47%/15%. Compared to overseas, Hang Seng Technology's PE valuation has been ranked at 7.1% in the past 8 years, ranking lower in the ranking of mainstream broadcasters.
Risk warning: The Middle East conflict spread beyond expectations, the Federal Reserve tightened beyond expectations, and the US dollar strengthened beyond expectations.