CITIC Securities: Hong Kong investors should prioritize defensive sectors like power
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In a note published on September 27, CITIC Securities advised Hong Kong stock investors to prioritize defensive, high-dividend sectors such as power, telecommunications, and public utilities amid expectations of tightening global liquidity. The brokerage noted that with relatively limited total funds, technology and biotech stocks—both high-elasticity, liquidity-sensitive growth sectors—tend to form a seesaw allocation relationship. It pointed out that since June, southbound capital flows have been relatively weak, while foreign capital has continued to flow back into Hong Kong stocks, dominating marginal pricing power. Against this backdrop, foreign capital has been flowing out of the Hang Seng Tech Index and into biotech stocks, creating a pattern where tech is weak and biotech is strong. Overall, CITIC stated that both the Hang Seng Tech and Hang Seng Biotech indices are under significant pressure in a high-interest-rate environment. The firm recommends focusing on sectors with strong defensive characteristics and stable dividend payouts.
Source report
September 27, 2024 — CITIC Securities has advised Hong Kong stock investors to prioritize defensive, dividend-stable sectors such as electric power, telecommunications, and public utilities.
According to the brokerage, technology and biotechnology—two growth-oriented sectors in the Hong Kong market with high elasticity and liquidity-sensitive valuations—tend to exhibit a seesaw allocation pattern when total available capital is relatively limited.
CITIC further noted that southbound capital inflows in 2026 have been relatively weak. Since June, foreign capital has been steadily returning to Hong Kong stocks, taking the lead in marginal pricing power. Against this backdrop, persistent foreign capital outflows from Hang Seng Tech and inflows into biotechnology have driven a divergence: the Hang Seng Tech Index has underperformed, while the Hang Seng Biotechnology Index has shown relative strength.
Overall, both the Hang Seng Tech and Hang Seng Biotechnology indices have faced significant pressure under the high-interest-rate environment. Given the current expectations of tightening global liquidity, CITIC Securities recommends that investors focus on high-quality sectors with strong defensive characteristics and stable dividends, including electric power, telecommunications, and public utilities.
Source
财联社Eastern