EBC Markets Briefing | Chinese stocks are great again

The Hang Seng Index rallied on Friday, but was heading for a weekly loss. A blistering rally in Chinese tech megacaps this year has left their once-unbeatable US peers in the dust, which is widely expected to continue.

Before DeepSeek cause a splash, the Nasdaq 100 had notched yet another record, while Chinese stocks were still marred by years of regulatory crackdown and a tepid consumption recovery.

A multi-year run in US big tech stocks, led by Nvidia, has hit a stumbling block as investors question the validity of their sky-high valuations and demand ever more in earnings surprises.

Still the benchmark index is priced at 7 times its projected 12-month earnings, compared to 20 times for the S&P 500, according to LSEG data. Beijing has planned to step up support for tech companies.

JP Morgan has seen a record amount of US dollars and Chinese yuan being converted into Hong Kong dollars over the past few weeks, pointing to the force of money flowing into Hong Kong stocks.

A broad selloff sent all three major US stock indexes tumbling overnight. A fresh Reuters/Ipsos poll of Americans showed that 57% of poll participants believe Trump's moves to shake up the economy are too erratic.

Goldman Sachs reduced S&P 500 targets this week. Morgan Stanley expects it to drop to 5,500 in H1, but JPMorgan noted the market overplays recession risks, leaving room for a positive surprise.

The Hang Seng Index sat comfortably above 50 EMA, but a bearish MACD divergence signalled a pullback towards the support below 23,200.

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