Standard Chartered Strategist: Hong Kong Stocks to Maintain Stock-Picking Focus as AI Stocks Remain Underweighted in Indices

According to Standard Chartered's Head of Investment, Zheng Zifeng, Hong Kong stocks are likely to maintain a "stock-picking over market selection" pattern in the near term. The strategist noted that the introduction of multiple AI-related IPOs this year has shown strong performance, but their contribution to the broader index remains minimal due to outdated index weightings that remain dominated by traditional industries.

Global fund flows are pressured by elevated interest rates, with capital continuing to shift between markets, particularly affecting Hong Kong equities. Zheng expects a significant market shift only after AI-related stocks are substantially incorporated into major indices with sufficient weighting. He also flagged upcoming mega-cap IPOs in the U.S. during the second half of 2026, which will further influence capital flows across Asian markets.