The Hong Kong stock market faces short-term downward pressure! Institutions: There is a discrepancy in current market expectations

Last week, the Hong Kong stock market further declined, which is consistent with our previous emphasis on increasing short-term disturbances and the recommendation to maintain a cautious judgment. In the short term, external pressures and geopolitical disturbances seem to be the main reasons for the market's "sudden" downturn. However, it fundamentally stems from the market itself being in a certain "weak equilibrium" between expectations and policy fulfillment. Specifically, there are currently three "expectation gaps" in the market: "Expectation Gap" One: The market's previous positive expectations for domestic stimulus. We estimate that an additional fiscal expenditure of 7-8 trillion yuan will help address the contraction issue, but the "real constraints" of high leverage, interest rates, and exchange rates mean that while there will be incremental stimulus, overly high expectations are unrealistic. Recently, a new limit of 6 trillion yuan in local government debt for three years has been set; if the subsequent central economic work conference raises the general public budget target, it may bring additional increments, but there is still a considerable distance from the aforementioned scale. "Expectation Gap" Two: A simplistic reference to the experience of the last round of tariff responses. The current policy thinking and macro environment are significantly different from the last round: 1) Stronger control over political resources: This round, Trump has absolute control over party, Congress, and public opinion resources; 2) Last term: The lack of re-election demands and pursuit of future political legacy may lead to different governance thinking compared to the first term; 3) The core team and the younger generation of the Republican Party's stance: The recently nominated cabinet candidates have political positions that are highly consistent with Trump and the Republican agenda. Additionally, several differences compared to 2018 also make the impact non-negligible: 1) Higher trade dependence; 2) Limited exchange rate hedging means; 3) Changes in the new round of trade policies. "Expectation Gap" Three: The expectation of a loosening of the "alliance strategy" against the Biden administration after Trump's inauguration. One interpretation in the market is the expectation that Trump will break the alliance relationships established during the Biden era; however, whether Trump's thinking will change in his second term, especially regarding key hawkish personnel in his team responsible for foreign policy, may also lead to changes in this situation being less than expected, which needs attention. From a configuration perspective, caution remains the priority in the short term, with 19,000 points being a key support level. Under the assumption of an overall oscillating pattern, the strategy of "gradually positioning on the left side during the downturn and moderately taking profits on the right side during the upturn" seems to be an effective approach. In terms of industries, we recommend focusing on three categories: industry clearing, policy support, and stable returns