Hong Kong stock concept tracking | Fed rate cut brings liquidity growth. Hang Seng Technology Index outperforms other sectors (with concept stocks).

The Federal Reserve lowered interest rates by 50bps at its September meeting in 2024, exceeding market expectations. On September 19/20, the daily trading volume of the Hang Seng Tech Index reached 42/53 billion Hong Kong dollars (compared to the 30-day average trading volume of 23.7 billion Hong Kong dollars as of September 17). Hong Kong stocks are expected to benefit from improved liquidity in the background of the Federal Reserve rate cut. From a valuation perspective, according to Bloomberg's consensus expectations as of September 13, the Hang Seng Tech Index's NTM PE ratio is at 12.6x, historically low, and the EPS growth rate for the Hang Seng Tech Index in 2024 is 25.8%, highlighting the cost-effectiveness of the allocation. Guosen pointed out that the Internet sector in Hong Kong stocks is clearly bottoming out, and the operational characteristics of new-stage giants are generally: more focused on core businesses, developing high-margin businesses; improving operational efficiency through organizational restructuring; increasing share repurchase and dividend efforts, with shareholder returns stronger than most sectors. According to the interim report of 24, the overall interim profit release of Internet giants is better than other sectors. CITIC SEC released a research report stating that looking ahead to 24H2, it is expected that the A-share Internet sector's market will revolve around consumption recovery, changes in competitive landscape, shareholder returns, and interest rate environment. With improved liquidity in Hong Kong stocks under the backdrop of the Federal Reserve's rate cut, the turning point in consumption still needs to be observed. In this context, the market may prefer targets with stable industry structure, deep competitive barriers, steady cash flow, and high shareholder returns. At the same time, it is recommended to focus on targets with continuous improvement in market share and monetization rate, and strong second growth curves with structural increments. In addition, attention should be paid to undervalued, internet companies with improving profitability. Leading companies in the Hong Kong stock Internet platform include: Tencent (00700), NTES-S (09999), BABA-W (09988), MEITUAN-W (03690), JD-SW (09618), TRIP.COM-S (09961), KUAISHOU-W (01024), Bilibili (09626), etc.