Since the US announced reciprocal tariffs in early April, Hong Kong stocks have displayed considerable resilience, successfully closing previous gaps, CCBI research report indicated. Underpinned by a basket of favorable financial policies at the start of the month, substantial US-China tariff reduction negotiations, and overall 1Q results beat, the HSI was expected to stabilize around the 22,800-level in the short term. However, the broker also observed a noticeable slowdown in capital inflows recently.

Separately, the sharp widening of the rate differentials between the HK and US and the intensive listing of several large IPOs tightened market liquidity, exerting certain pressure on short-term market liquidity. Therefore, the HSI was forecast to face strong resistance around the 24,000-mark, and the market may maintain a volatile consolidation pattern. The broker recommended to keep a cautious investment approach.

Looking ahead, CCBI assumed that further upside potential for Hong Kong stocks will mainly depend on three key factors: whether the US and China can achieve substantial breakthroughs in trade negotiations before the end of the 90-day tariff suspension period; whether 2Q economic data can continue to beat consensus; and whether the Federal Reserve will resume interest rate cuts in 3Q.