{Market Preview}Investors can consider China Telecom

  The Hang Seng Index reported 18,859 in the morning session, up 321 points or 1.7%. The main board turnover exceeds HKD 93.9 billion. The Hang Seng China Enterprises Index reported 6,679, up 118 points or 1.8%. The Hang Seng Tech Index reported 3,936, down 11 points or 0.3%.
  The top three traded stocks on the HSI are CCB (00939), HKEX (00388), and Tencent (00700). CCB closed at HKD 5.61, up HKD 0.33 or 6.2%, with a turnover of HKD 6.789 billion. HKEX closed at HKD 283.6, up HKD 18 or 6.8%, with a turnover of HKD 3.611 billion. Tencent closed at HKD 370, up HKD 0.2 or less than 0.1%, with a turnover of HKD 3.274 billion. The top three traded stocks on the Hang Seng China Enterprises Index are CCB, Tencent, and China Mobile (00941). China Mobile closed at HKD 73.8, up HKD 3.2 or 4.5%, with a turnover of HKD 2.817 billion. The top three traded stocks on the Hang Seng Tech Index are Tencent, Alibaba (09988), and Meituan (03690). Alibaba closed at HKD 77.8, up HKD 1 or 1.3%, with a turnover of HKD 1.92 billion. Meituan closed at HKD 117.8, down HKD 0.1 or less than 0.1%, with a turnover of HKD 1.676 billion.

"Jaseper Tsang: HSI is poised to surpass 19,000 and target 19,700"

  After the market closed yesterday, there were reports that the Mainland China is considering exempting Mainland China individual investors from paying the 20% income tax on dividends received from Hong Kong-listed companies through the Stock Connect, to avoid double taxation between the Mainland China and Hong Kong. According to the reports, the relevant plan has been submitted to the regulatory authorities.
  Although the implementation and effective date are still variable, the news stimulated a strong rise in Hong Kong stocks this morning. HKEX (00388) opened more than 3% higher and briefly expanded its gains to around 7%. High-dividend stocks received intense buying interest, and China special value sectors such as banks, insurers, and Chinese telecommunications stocks all saw broad gains. In contrast, technology stocks and automobile stocks with low or no dividends generally faced selling pressure in the morning session. Jaseper Tsang, the investment director of Rafter Capital, told ET Net News Agency that if the above news materializes, it would help stimulate demand from southbound funds. Given the current momentum, there is a strong possibility that the Hang Seng Index could challenge the important technical level of 19,700.

"Sharp rise and minor pullbacks in the Hong Kong stock market reflect increased long-term fund holdings"

  Jaseper Tsang also mentioned that during the 1 May holiday period when southbound funds temporarily stopped inflowing, the Hong Kong stock market still recorded a daily average turnover of over HKD 100 billion, indicating that foreign investors are willing to actively absorb Hong Kong stocks even in the absence of southbound funds. In addition, the recent sharp rise and minor pullbacks in the Hong Kong stock market indicate increased long-term fund holdings. Apart from hedge funds driving the market with flat positions, the most powerful long-term funds are increasing their holdings of Hong Kong stocks, leading to a different trend than before.
  He emphasized that the market outlook improved significantly after the Politburo meeting at the end of April, which indicated the Mainland China's focus on resolving the issues of housing inventory. This has rebuilt foreign investors' confidence in the stability of the Chinese economy and provided tremendous support for the rise in Hong Kong stocks.

"Telecommunications stocks are less affected by economic cycles"

  Jaseper Tsang pointed out that the positive impact of the China special value concept has not been fully absorbed since its introduction. This concept is an important reform by the central government regarding the capital market. More state-owned enterprises have announced plans to increase their dividend payout ratios, aligning with the China special value concept and boosting market interest in rated stocks. Additionally, with market expectations of the US starting to cut interest rates this year, stocks with higher dividends than US rates naturally become more favoured.
  Among the various high-dividend China special value stocks, Jaseper Tsang recommends telecommunications stocks because they are less affected by economic cycles. Because the future interest rate reduction cycle is unfolding, sectors such as finance are more susceptible to economic cycles, while telecommunications stocks are less affected by economic cycles. It is expected that telecommunications stocks have a higher long-term value proposition. He also points out that to fully enjoy the high dividend feature of China special value stocks, one must hold them on an annual basis. Therefore, among the three major telecommunications stocks, he recommends China Telecom (00728). The favourable buying range for China Telecom is around HKD 4.5, and with its active development in cloud business, it is expected to benefit from the AI boom.