From Wall Street to the Hong Kong and China stock markets: Can the shift in U.S. stock style be copied as our homework?

Recently, the U.S. stock market has shown clear signs of a style shift, with tech giants losing their shine. Meta has fallen more than 15% since late October (the 28th), NVIDIA has retreated 11% from its 52-week high, and Microsoft has also dropped 10% from its peak.

Wall Street funds are quietly shifting to defensive sectors like consumer staples. Walmart, as a defensive giant, derives nearly 60% of its revenue from groceries and household necessities, and even rose 1.39% against the market's overall decline.

Recently, the cumulative net purchases of Hong Kong stocks by southbound capital have historically exceeded HKD 5 trillion, with net inflows reaching HKD 1.31 trillion this year. But does this mean the China-Hong Kong market is also experiencing the same "value regression"?

01 The Different Faces of Value Stocks: When Wall Street Meets Central

The "value regression" in U.S. stocks has a clear logical thread. Faced with market uncertainty, investors are flocking to defensive sectors with stable demand and ample cash flow.

Walmart, as a typical example, derives its defensiveness from selling goods that are "what consumers need, not what they want"—food, cleaning supplies, and medical supplies.

These goods maintain stable demand even during economic uncertainty, allowing Walmart to remain stable during market weakness.

Meanwhile, "value stocks" in the China-Hong Kong market show different characteristics. The "value stocks" favored by Stock Connect funds are mainly concentrated in traditional industries like finance, oil and petrochemicals, and telecommunications.

These companies share the characteristics of low valuations, small gains, and high dividend yields, becoming a "safe haven" for funds in the current market environment.

For example, China National Offshore Oil Corporation (CNOOC) has a dividend yield of 6.06% over the past 12 months, attracting long-term capital allocations like insurance funds.

02 Lessons from the Shift: The Wisdom of Style Hedging

The essence of this style shift in U.S. stocks is the withdrawal of some chips from extremely crowded tech stocks and a turn to value stocks.

This shift reflects Wall Street's repricing of current market risks—not seeking a permanent home but making a tactical adjustment.

The core issue facing the A-share and Hong Kong markets is overall sentiment and risk appetite. CICC analysis points out that the core issue in the Chinese market is the ongoing credit contraction in the private sector.

The key reason is not insufficient money supply or high interest rates but investment return expectations consistently below financing costs.

What we should really learn is not which specific sectors U.S. stocks have turned to but the idea of "reserving style hedging in a single-trend market." When the market is overly concentrated on one trend, diversify into other style assets in advance to smooth out potential pullbacks.

The Hong Kong market has already shown the practice of this idea. The recent reallocation direction of southbound capital has shifted from favoring "offense" to "defense," with funds flowing from internet giant Alibaba-W to oil and gas giant CNOOC as a typical case.

03 Three Directions for Localized Strategy Building

Against the backdrop of the U.S. stock style shift, we can build strategies suitable for the China-Hong Kong market from three directions.

High-dividend and high-cash-flow sectors have become the preferred defensive weapons. Traditional industries like banking, oil and petrochemicals, telecommunications, non-bank finance, and coal in the Hong Kong market have recently seen large inflows of southbound capital.

Most of these sectors have the characteristics of low valuations, small gains, and high dividend yields, becoming a "safe haven" for funds in the current market environment.

Gree Fund researcher Tuo Hejiang pointed out that the Hong Kong market has a large number of scarce high-quality assets, such as internet platforms, innovative pharmaceutical companies, and high-dividend energy and financial companies, which have become important targets for long-term capital allocations by insurance, public funds, and social security.

Industries and manufacturing under industrial upgrading are also worth watching. CICC recommends focusing on new consumption trends benefiting from demographic and economic structural transformations, as well as tech sectors driven by AI industrialization and the restructuring of the global digital ecosystem.

These areas can provide "growth returns" and occupy favorable positions in economic transformation.

Globally competitive healthcare and consumer companies offer a compromise between defense and growth. Public funds' top holdings in Hong Kong stocks include China Biopharmaceuticals, CSPC Pharmaceutical Group, and other healthcare companies.

Jim Cramer also noted that investors can focus on the pharmaceutical industry, where he expects major mergers, naming Johnson & Johnson and Amgen as stable choices.

The style shift in U.S. stocks provides a window for observation, but we cannot simply copy the "U.S. stock value style." The China-Hong Kong market has unique valuation structures, investor compositions, and policy environments.

Asset allocation and risk management are the keys, not betting on a single style.

For China-Hong Kong market investors, rather than chasing the U.S. stock style shift, it is better to re-examine the "internal strength" of their portfolios—Is the holding structure reasonable? Is risk exposure overly concentrated? Are there enough defensive assets to cope with market volatility?

In a volatile market, investors might as well learn the strategy of "intervening when the market is down and taking profits when it is exuberant" combined with "focusing on structural opportunities."

In an environment where "capital is abundant" and "assets are scarce," funds either flow into stable-return or value-preserving assets or into assets with growth potential.

True wisdom lies not in copying others' homework but in understanding the essence of the market and formulating investment strategies that align with one's own risk preferences and market characteristics. This is the fundamental way to navigate market style rotations.$HSTECH ETF(03032.HK) $Tesla(TSLA.US) $NVIDIA(NVDA.US) $TENCENT(00700.HK) $ZIJIN MINING(02899.HK) $CALB(03931.HK)