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Recently, renowned economist and CEO of Huafu Securities, as well as Chief Global Asset Allocation Officer, Hong Hao, provided an analysis and judgment on the Hong Kong and U.S. stock markets during a program.
The investment notebook representative summarized the key points as follows:
<ol>
<li>The rebound in U.S. stocks in May will continue, but this does not indicate a reversal of the market.</li>
</ol>
From a trading perspective, there is currently a trading window that may last for two weeks or even longer.
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<li>
If the U.S. fiscal policy is contractionary rather than expansionary this year, and both fiscal and monetary policies are contracting, then we will see a repeat of the 2022 market scenario—double whammy for stocks and bonds.
</li>
<li>
The correction in U.S. stock valuations is not over; it needs to drop by at least one-third, down to around 15 times earnings, to be considered reasonable.
</li>
<li>
Previously, when risk appetite declined, U.S. stocks and the dollar fell together. Now, it is not surprising that U.S. stocks and the dollar are rising together, as the dollar has become a risk asset.
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If choosing technology stocks, Chinese technology stocks, especially those in the Hong Kong market, are more attractive.
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The Hong Kong stock market should reach a new high in the second half of the year.
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</ol>
Below is the essence compiled by the investment notebook representative (WeChat ID: touzizuoyeben), shared with everyone:
<h2>U.S. Stock Rebound, Not a Reversal</h2>
Host: Today we have economist Hong Hao with us to discuss the stock market, especially the U.S. and Hong Kong stocks.
Let's first talk about the rebound in U.S. stocks in May. Do you remember the strong market reaction when Trump announced tariffs on April 2? The subsequent rebound was also quite evident. Does this rebound indicate that market confidence has been restored?
Hong Hao: Confidence has been restored. April has basically stabilized, and it seems like not much has happened, but we can see that there was actually a historic crash, with the S&amp;P index close to 4800 points and the Hang Seng index reaching 19000 points.
At that time, many bad news had already been reflected in market prices. Moreover, due to the rapid decline, it created trading rebound opportunities.
Therefore, we still believe that this rebound will continue, but it is not a reversal of the market. However, I think this trading window may last for two weeks or even longer. From a trading perspective, people should not be too pessimistic.
Host: If after a few weeks the rebound occurs, does that mean there is a possibility of another decline?
Hong Hao: That is possible, but I think in this ever-changing market, the next two weeks of trading are still very attractive because no one knows what will happen tomorrow.
If Trump suddenly decides to raise tariffs, then it would be hard to say. So far, we believe that technically, the current rebound structure exists.
Additionally, there are reports that China is negotiating with the U.S., and this news is gradually improving. Therefore, we believe that the Hong Kong stock market should reach a new high in the second half of the year
Host: A recent point of market speculation is performance, with many results exceeding expectations. However, there are also some performances that are not good and may not have received a good response.
If one wants to speculate in the short term in the US stock market now, should we look for some quality stocks? For example, Apple has clearly stated that tariffs will affect its future costs, while Microsoft's valuation has dropped to a relatively attractive level. Some analysts believe that companies like Microsoft may outperform the market.
Hong Hao: If choosing technology stocks, I would select some software stocks, such as Google, Microsoft, Meta, etc., which are all software and service companies.
On the other hand, hardware companies like NVIDIA and Apple are greatly affected by the trade war, especially in terms of tariffs and transportation.
I believe that Chinese technology stocks, especially Hong Kong technology stocks, are more attractive.
On one hand, the prices are cheap, and on the other hand, we believe that in the context of Sino-US competition, technology is a very important sector, so there will be more policies to support this sector.
At the same time, the consumer sector should also see some favorable policies, whether it is short-term consumption stimulus or long-term social security reform, all of which will bring a relatively good market for consumer stocks.
Although there is a wave of rebound in the global market, the value and safety margin of Chinese technology stocks are actually higher.
<h2>US stock valuations are very expensive, a further drop of one-third would be reasonable</h2>
Host: In other words, you think US stocks are not worth it now.
Hong Hao: The current valuations are still very expensive, even though they have dropped, they are still very expensive.
Host: So to what extent do you think it would be reasonable? Previously, the advantage of US stocks was the dollar, and everyone had confidence in it, and technology was also far ahead. But now, you see that many things have actually reversed, and valuations need to adjust downward.
Hong Hao: I think so, because there has been a lot of talk about the superiority of the US, but after this historic crash, everyone should re-examine Chinese stocks. The valuations are relatively cheap, and as tariff negotiations deepen, more policy details will be released.
Host: If US stocks really need to correct, to what extent would be considered reasonable?
Hong Hao: I think they need to drop at least one-third to be considered reasonable. For example, dropping to around 15 times. If a major recession occurs, the logic for this year is very simple. If tariffs push up US inflation, we have already seen inflation expectations rise to about 7%, which is the highest level in years and rising rapidly.
If tariffs push up inflation, then you cannot lower interest rates at all because inflation is too high. Moreover, if US fiscal policy is contracting rather than expanding this year, with both fiscal and monetary policies tightening simultaneously, it would lead to the market situation of 2022, resulting in a double whammy for stocks and bonds.
Because inflation is too high, interest rates need to remain high, so bonds perform poorly. And stocks, due to the simultaneous tightening of monetary and fiscal policies, will also perform poorly. Therefore, technology stocks fell nearly 40% in 2022.
Host: The Federal Reserve has two tasks: stabilizing employment and controlling inflation. Recent data has shown that inflation expectations are very high, with core personal consumption expenditures exceeding market expectations, reaching 3.5%. The GDP for the first quarter of 2025 in the US has also contracted for the first time in three years, with a quarter-on-quarter annualized reduction of 0.3%
Consumer spending growth has fallen to a two-year low, manufacturing is also deteriorating, and the job market is worsening.
Hong Hao: Therefore, Powell faces the risk of &#34;unemployment.&#34; If inflation does not decline this year and negotiations between China and the U.S. do not go smoothly, there could be significant uncertainty.
Thus, I believe the correction in U.S. stocks may not be over yet.
<h2>The Speed of Deterioration in the U.S. Economy Will Accelerate</h2>
Host: Recently, most data regarding the U.S. economic outlook has turned negative.
Hong Hao: That's right, the speed of deterioration may accelerate going forward.
We saw negative GDP growth in the first quarter due to inventory effects. This led to a decline in GDP, which is technically a negative growth.
I believe a similar situation will occur in the second quarter, as there is still uncertainty surrounding tariff negotiations in Q2.
Some data in Q2, such as employment, working hours, wage growth, retail growth, and PMI, will show significant deterioration.
Therefore, it is not ruled out that the first and second quarters may experience negative growth like in 2022, which technically indicates a recession. The probability of this happening this year is very high.
<h2>The U.S. Dollar Has Become a Risk Asset</h2>
Host: Let's talk about the outlook for the U.S. dollar. When tariffs were announced in early April, there were concerns that inflation would soar, but at that time, interest rates were high, and people felt that rates would not be cut, leading to a decline in the dollar. Later, after data was released, expectations for a potential rate cut by the Federal Reserve emerged, and the dollar rose again.
Hong Hao: That's right. Even if the Federal Reserve cuts rates, the U.S. rates are starting from a very high level. Therefore, the interest rate differential between China and the U.S. remains significant, and similar situations exist in Europe and Japan.
This provides support for the dollar, but I think the most important factor is the flow of funds.
Previously, when risk appetite decreased, U.S. stocks and the dollar fell together. Now, it is not surprising that U.S. stocks and the dollar are rising together, as the dollar has become a risk asset.
Source: Investment Workbook Pro Author: Class Representative
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Risk Warning and Disclaimer
The market has risks, and investment requires caution. This article does not constitute personal investment advice and does not take into account the specific investment goals, financial situation, or needs of individual users. Users should consider whether any opinions, views, or conclusions in this article are suitable for their specific circumstances. Investment based on this is at one's own risk

Renowned economist Hong Hao analyzed the Hong Kong and U.S. stock markets, believing that Hong Kong stocks are expected to reach new highs in the second half of the year, while U.S. stock valuations remain relatively high, with a reasonable correction expected to drop by more than one-third. He pointed out that the rebound in U.S. stocks does not indicate a market reversal, and there is currently a trading window that may last for several weeks. At the same time, if U.S. fiscal tightening occurs, a situation of simultaneous declines in stocks and bonds may arise. He suggested that investors pay attention to the attractiveness of Hong Kong tech stocks

- Renowned economist Hong Hao analyzed the U.S. and Hong Kong stock markets, predicting that the U.S. stock rebound in May will continue but not signify a market reversal.  
- He emphasized that U.S. stock valuations remain high and should drop by at least one-third to be considered reasonable, while suggesting that Chinese tech stocks, particularly in Hong Kong, are more attractive.  
- Hong also noted that the U.S. economy is likely to face accelerated downturns, with potential negative growth in the upcoming quarters due to ongoing uncertainties in trade negotiations.

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Hong Hao: Hong Kong stocks will reach new highs in the second half of the year, while U.S. stock valuations are still very expensive; a one-third drop would be reasonable