Haitong International Zhang Yidong: The AI market in Hong Kong stocks is expected to return to an upward trend and spread further into the broader AI industry chain

The Zhitong Finance App learned that Haitong International analyst Zhang Yidong released a research report saying that the uncertainty of lifting the ban in July came to fruition as scheduled and turned into actual market fluctuations. Overall, the lifting of the ban does not constitute a systemic risk to the Hong Kong stock technology market. The “summer cold wind” adjustments in June and July are entering the aftermath phase. Second, the risk of lifting the ban in July is gradually being realized, and relevant key companies have entered fundamental pricing. After the ban is lifted, the pricing logic of AI model companies will shift from a game of unbanned events, scarcity, and small circulation to commercial cashing and profit quality verification. In August, as overseas macro-liquidity and micro-liquidity shocks abated and the southbound carrying capacity of superimposed connectivity increased, the AI market is expected to return to an upward trend and further spread from AI scarce assets to the broader AI industry chain.

Haitong International's main views are as follows:

Although the large-scale lifting of the ban in July combined with adjustments in major overseas stock markets had an impact on the Hong Kong stock market, the bank believes that the summer cold wind has reached the aftermath stage. In a context where the medium- to long-term AI trend is still improving, risk is off due to short-term macro capital (the Federal Reserve's hawk) and micro capital (deleveraging of the Korean stock market, impact of the lifting of the Hong Kong stock ban, etc.), but it is more difficult to cause the AI bull market to end. Instead, it has provided an opportunity for the subsequent spread of the AI market to a wider industrial chain.

The warning has been verified: the risk of lifting the ban in July was realized as scheduled, and there was structural differentiation. There is a clear difference in the pressure faced by the two companies to lift the ban. The contraction in stock prices and risk appetite before the ban is lifted, fluctuations during the window period, and individual stock differentiation reflect that the funds have differentiated pricing on different chip structures and subsequent fundamental expectations.

Sentiment: Since July, the risk premium for Hong Kong stocks has risen and changed hands, and the negative mood has been fully measured. The average risk premium for the Hang Seng Index rebounded in July compared to June. Risk appetite was marginally restored. The turnover rate of the Hang Seng Tech Index rose MA5 before and after the ban was lifted, active market capital increased, and the willingness to take on the bottom picked up. On the day the ban was lifted, the turnover rapidly declined after the pulsating amplification, indicating that the pressure on centralized trading was easing. The bottom of the sentiment between the sector and the two core targets is likely to have formed during the lifting of the ban. The decline in the early period was essentially an early release of a negative position, but the subsequent trend still depends on financial commitment and fundamental catalysts.

Financial side: The impact of selling pressure is being digested by structural forces

Southbound funding capacity determined the trend diverged after the ban was lifted. Smart Spectrum (02513) was included in the Hong Kong Stock Connect on June 8. As of July 14, domestic investors held about 14.55 million shares of Zhi Pu through Hong Kong Stock Connect. According to the estimate of 17.35 million shares in tradable before the ban was lifted plus 25.68 million shares unbanned * 30% of the sell-off ratio = 2.55 million tradable shares, Southbound shares accounted for about 58% of the circulation market. Furthermore, since July 8, the day the ban was lifted, Zhipu has received huge net southbound capital purchases (cumulative net purchases of about HK$22 billion) for six consecutive trading days, and has received continuous and clear incremental capital support.

The external liquidity environment is expected to usher in an improved turning point. Focus on the repricing of long-term interest rates in the second half of the year. The long-term interest rate on US bonds is a discount anchor that determines the pricing of highly valued growth stocks in Hong Kong stocks. The US inflation data for June weakened marginally, and market concerns about the July Fed meeting's interest rate hike eased somewhat. With the implementation of the interest rate meeting at the end of July, it is expected that the external liquidity shock faced by Hong Kong stock technology growth assets (that is, the risk that long-term interest rates on US bonds will rise above expectations) will be further mitigated by early August. The market's attention on lifting the ban will also weaken, and the pricing focus for AI big model companies is expected to shift from short-term capital aspects of the stock market back to internal company variables such as mid-term reporting, AI ARR, and big model release and adoption.

The global AI trading congestion level in July will return to reasonable after the adjustment. The short-term adjustment of the AI market is similar to a “danger” and a real “opportunity”. After recent adjustments, the global AI-related technology stock trading congestion situation has eased somewhat, and the VXN (Nasdaq Hidden Wave) - VIX (S&P Hidden Wave) price spread has recently declined from a high level. Standing in mid-July, global AI transactions have yet to completely break out of high volatility. The aftermath of short-term adjustments is still there, but subsequent market adjustments are “dangerous” and “opportunity”, and the AI industry chain can be patiently laid out. The medium- to long-term trends in the AI industry are still optimistic. AI technology will drive corporate profit growth, transform and empower more industry segments. Leading technology companies have recently made it clear that they will continue to increase AI capital expenditure.

Risk warning: geopolitical risks, changes in the global liquidity environment, international capital flows, and actual reduction of individual stock holdings after the ban is lifted.