CITIC Securities released a research report stating that US bond yields soared this week, reflecting investors starting to worry further about who will “pay” for US Treasury bonds in the future against the backdrop of rising inflation expectations, imminent interest rate hikes by the Federal Reserve, and increased fiscal pressure on the US. The CBO benchmark predicts that the amount of US debt held by the public will increase from 32.1 trillion US dollars to 56.2 trillion US dollars over the next ten years, and the supply drive has changed from fiscal expansion to interest-based structural growth. The combined share of the Federal Reserve and foreign holders fell to 44.7% from a peak of 69.1% in 2015. The two major non-price-sensitive buyers declined simultaneously, and the term premium returned to positive values. The systematic upward shift in the long-term interest rate center from 2-3% to 4-5% is a reasonable pricing for rebalancing supply and demand. Regarding Hong Kong stocks, judging from the two rounds of the Fed's interest rate hike cycle from 2016 to 2018 and 2022 to 2023, the overall southbound capital showed phased characteristics of continuous net inflows in the first half of the rate hike and a marked slowdown in the second half; the trend of the central price of the US dollar against the RMB also showed a high degree of synchronicity with the flow of southbound capital inflows. The recommendation for the dividend strategy for Hong Kong stocks is maintained, but as risk-free interest rates continue to rise overseas, the relative yield advantage of Hong Kong stocks with high dividends has narrowed. In terms of allocation, cash flow stability, profit certainty, and dividend sustainability should be further examined, and attention should be paid to the segmentation direction where southbound holdings are relatively high and marginal pricing power for foreign capital is relatively low.

CITIC Securities released a research report stating that US bond yields soared this week, reflecting investors starting to worry further about who will “pay” for US Treasury bonds in the future against the backdrop of rising inflation expectations, imminent interest rate hikes by the Federal Reserve, and increased fiscal pressure on the US. The CBO benchmark predicts that the amount of US debt held by the public will increase from 32.1 trillion US dollars to 56.2 trillion US dollars over the next ten years, and the supply drive has changed from fiscal expansion to interest-based structural growth. The combined share of the Federal Reserve and foreign holders fell to 44.7% from a peak of 69.1% in 2015. The two major non-price-sensitive buyers declined simultaneously, and the term premium returned to positive values. The systematic upward shift in the long-term interest rate center from 2-3% to 4-5% is a reasonable pricing for rebalancing supply and demand. Regarding Hong Kong stocks, judging from the two rounds of the Fed's interest rate hike cycle from 2016 to 2018 and 2022 to 2023, the overall southbound capital showed phased characteristics of continuous net inflows in the first half of the rate hike and a marked slowdown in the second half; the trend of the central price of the US dollar against the RMB also showed a high degree of synchronicity with the flow of southbound capital inflows. The recommendation for the dividend strategy for Hong Kong stocks is maintained, but as risk-free interest rates continue to rise overseas, the relative yield advantage of Hong Kong stocks with high dividends has narrowed. In terms of allocation, cash flow stability, profit certainty, and dividend sustainability should be further examined, and attention should be paid to the segmentation direction where southbound holdings are relatively high and marginal pricing power for foreign capital is relatively low.