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<Research>DBS Expects HK Stocks to Trade in 'Sideways' This Qtr, Favors Policy Beneficiaries/ High-Yield Names in Defensive Sectors
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While US President Donald Trump has recently adopted a softer tone on tariffs against China, this does not signal a swift agreement between the US and China, according to a report released by DBS Group Research on Hong Kong stocks last Friday (25th). In the broker's opinion, the risk of Chinese ADRs being delisted remains a concern, and it reiterated its view that the market will trade "sideways" in 2Q25. It was optimistic about stocks that benefit from policies and high-yield names in defensive sectors, while remaining selective among tech stocks. The report also pointed out that Trump had recently softened his stance on several issues, including trade tensions with China. However, China's firm position suggested that constructive dialogue between the two sides still has a long way to go, making a genuine easing of tensions in the short term unlikely. With US-China tensions still posing risks, there is a potential for the US to force Chinese ADRs to delist. Currently, 387 Chinese stocks are listed on US exchanges, with 33 already having a secondary listing in Hong Kong, making them less affected by potential restrictions. 21 Chinese ADRs, including Pinduoduo (PDD.US) and Futu (FUTU.US), now meet the criteria for a secondary listing in Hong Kong, DBS Group Research said. If these companies proceed with a Hong Kong listing, the broker expected that their share prices will react positively, and the HKEX (00388.HK) will benefit from the accelerated migration of ADRs to Hong Kong. DBS Group Research also provided a list of stocks in response to easing US-China tensions, including AIR CHINA (00753.HK), CHINA EAST AIR (00670.HK), CATHAY PAC AIR (00293.HK), CHINA SOUTH AIR (01055.HK), MINTH GROUP (00425.HK), NEXTEER (01316.HK), MNSO (09896.HK), CH MODERN D (01117.HK), COFCO JOYCOME (01610.HK), BABA-W (09988.HK), Pinduoduo (PDD.US), TENCENT (00700.HK), WUXI BIO (02269.HK), WUXI APPTEC (02359.HK), FLAT GLASS (06865.HK), GCL TECH (03800.HK), GDS-SW (09698.HK), AAC TECH (02018.HK), BYD ELECTRONIC (00285.HK), LENOVO GROUP (00992.HK), SUNNY OPTICAL (02382.HK), and HKEX (00388.HK). AAStocks Financial News |
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