Galaxy Securities: The Hong Kong stock market is expected to continue its volatile trend in the short term.

China Galaxy Securities released a research report stating that on January 20th, the United States will hold the inauguration ceremony of President-elect Trump. After that, Trump's policy towards China will become clearer, and China's response policy will also become more clear. At the same time, as listed companies' annual reports continue to be disclosed, stocks with better-than-expected performance may see price adjustments. In the short term, the Hong Kong stock market is expected to continue its turbulent trend. In terms of allocation, first, under the policy stimulus of expanding domestic demand and stabilizing consumption in China, Hong Kong stocks in the consumer sector with relatively low valuation levels are expected to rise. Second, the technology sector still offers high investment opportunities, especially in areas such as artificial intelligence, consumer electronics, and semiconductors. After Trump's election, the importance of China's domestically controllable logic in technology has increased. Meanwhile, the importance of new quality productivity in China's economic development is also increasing, supported by policy. Third, amid uncertainties overseas, the high dividend strategy in the Hong Kong stock market remains attractive, especially for centrally controlled high-dividend targets. Review of the Hong Kong stock market this week: (1) Market performance: Most global equity markets rose this week (January 13th-17th). The Hang Seng Tech Index and the ChiNext Index rose the most, with the US stock market and European stock markets also rising. (2) The Hong Kong stock market fell at the beginning of the week and then rose. The Hang Seng Index rose by 2.73% this week to close at 19584.06 points. The technology index rose by 5.13%, and the state-owned enterprise index rose by 3.05%. All Hang Seng industry indexes rose, with the information technology sector, non-essential consumption, and healthcare sectors leading the gains, increasing by 4.11%, 3.03%, and 2.95% respectively. (3) Sentiment: The average daily trading volume on the Hong Kong Stock Exchange this week was HK$137.04 billion, a decrease of HK$16.94 billion from the previous week. The average daily short selling amount this week was HK$18.64 billion, an increase of HK$0.84 billion from the previous week. The average daily short selling amount as a percentage of the trading volume was 13.62%, an increase of 1.91 percentage points from the previous week. (4) Valuation and risk preference: As of January 17th, the PE valuation of the Hang Seng Index was 8.92 times, at the 17.31st percentile since 2010. The 10-year US Treasury bond yield fell by 16 basis points to 4.61% compared to the previous Friday. The ERP of the Hang Seng Index relative to the 10-year US bond was 6.6%, at the 32.57th percentile since 2010. (5) AH premium: As of January 17th, the Hang Seng Shanghai-Hong Kong Stock Connect AH share premium index fell by 1.55 points from the previous week to 142.42, at the 77th percentile level since 2014. Key events of this week: (1) Domestic perspective: In 2024, China's GDP reached 1349084 billion yuan, an increase of 5.0% in constant prices compared to the previous year. In terms of quarters, the GDP growth rate was 5.3% in the first quarter, 4.7% in the second quarter, 4.6% in the third quarter, and 5.4% in the fourth quarter. In 2024, the value-added of large-scale industrial enterprises nationwide increased by 5.8% compared to the previous year, the value added of the service industry increased by 5%, the total retail sales of consumer goods increased by 3.5%, and fixed asset investment increased by 3.2%. The national urban surveyed unemployment rate decreased by 0.1 percentage points compared to the previous year, and per capita disposable income of residents actually increased by 5.1%. Signs of stabilization in housing prices in December. In December 2024, among 70 large and medium-sized cities, the selling prices of residential properties in first-tier cities rose month on month, while the overall decline in prices in second and third-tier cities narrowed. (2) Overseas perspective: The unexpected cooling of the core CPI in the US raised expectations of a rate cut by the Federal Reserve. The non-seasonally adjusted CPI in the US rose by 2.9% year-on-year in December last year, the third consecutive month of rebound and the highest since July 2024, in line with market expectations. However, the core CPI fell to 3.2% on a year-on-year basis, the lowest since August 2024, with market expectations remaining stable at 3.3%. Risk Warning: Uncertainty in domestic policy effectiveness; risk of disturbance from geopolitical factors; risk of unstable market sentiment.