Raymond Sun of the Swiss Union: The return of foreign capital depends on two key factors. The short-term performance of Hong Kong stocks is expected to fluctuate within a range.

Hong Kong stocks are fluctuating at high levels. Lin Yan, the head of North Asian stock business at Union Bancaire Prive (UBP), believes that attracting foreign capital back depends on two key factors: how the government restores consumer and private enterprise confidence, and increasing visibility of Trump's policies. Lin Yan stated that mainland policies are blowing a warm wind, clearly stating support for private enterprises, improving market confidence, so even if there is a correction in Hong Kong stocks, the trend remains strong. She hopes that with increased investment from private enterprises, the mainland's economy will improve in the second quarter. However, considering the market has accumulated a certain increase, Hong Kong stocks are expected to see short-term fluctuations within a range. The upward trend may spread from technology stocks to other industries such as consumer goods Lin Yan points out that the Hang Seng Tech Index has a price-earnings ratio of about 18 times, while the Nasdaq Index is about 24 times, and there is absolute room to narrow the gap between the two, but it will take time to repair gradually. She believes that, "some long-term investors have already returned to the market, but market challenges remain. The index may not skyrocket later, but the upward trend may spread from technology stocks to other industries such as consumer goods." The lowest point of market confidence in China has passed The unpredictable policy changes by US President Trump have made foreign investors hesitant to significantly increase their holdings in Hong Kong and mainland stock markets. Therefore, the current upward trend in Hong Kong stocks is mainly driven by northbound funds and hedge funds, with no apparent movement from overseas long positions that are underweight. Lin Yan believes that although a situation where foreign capital flows in entirely has not yet appeared, the lowest point of market confidence in China has passed. China should prioritize strengthening itself first. The determination of the central government can be seen from a deficit rate of 4%, but the future will depend on policy implementation and whether private enterprises cooperate to jointly promote economic recovery. "The first stage of valuation repair of Chinese tech stocks triggered by DeepSeek is ongoing, and the market is still excited. The next six months will enter the second stage, where one should pay attention to the revision of company profits. The structural trend of artificial intelligence (AI) is irreversible, so one should pay special attention to how tech companies are positioning themselves in AI, how much cost saving they can achieve, and their monetization capabilities."