Jiangyin International: The "slow bull" market in Hong Kong stocks is expected to continue, extending the "high elasticity" + "high dividend" barbell strategy

According to the Zhitong Finance APP, Jiangyin International released a research report stating that in September, Hong Kong stocks continued to show a fluctuating upward trend, boosted by the dual benefits of the resumption of Sino-U.S. negotiations and expectations of overseas interest rate cuts, along with a rotation increase in the technology sector, which provided significant support to the market. The external environment continues to improve, with the resumption of Sino-U.S. trade negotiations, where both sides are discussing key issues such as tariff reductions and export controls, leading to an increase in market expectations regarding the progress of bilateral relations. Due to the impact of the National Day and Mid-Autumn Festival holidays, the market is expected to briefly enter a "low season" mode, compounded by uncertainties surrounding the U.S. government's short-term financing bill, which may amplify overseas disturbances. Meanwhile, there are still differences in the market regarding the timing and extent of the Federal Reserve's interest rate cuts, and in the short term, the main tone may still be "conditional rate cuts," with fluctuating expectations potentially causing market volatility.

Jiangyin International's main viewpoints are as follows:

External environment continues to marginally improve, market risk appetite steadily increases

In September, Hong Kong stocks continued to show a fluctuating upward trend, boosted by the dual benefits of the resumption of Sino-U.S. negotiations and expectations of overseas interest rate cuts, along with a rotation increase in the technology sector, which provided significant support to the market. The external environment continues to improve, with the resumption of Sino-U.S. trade negotiations, where both sides are discussing key issues such as tariff reductions and export controls, leading to an increase in market expectations regarding the progress of bilateral relations. At the same time, macro policies in mainland China maintain continuity and stability, with a sufficient reserve of "stabilizing growth" policy tools, which also provides fundamental support for Hong Kong stocks.

Overseas interest rate cuts resume, liquidity pressure in Hong Kong alleviates, southbound funds continue to accelerate inflow

In late August, liquidity in Hong Kong stocks tightened at one point, with the 1-month HIBOR approaching over 3.9%, but with the Federal Reserve's interest rate cuts taking effect, the Hong Kong dollar interest rate center has declined from high levels. Southbound funds continued to accelerate their inflow trend in September, with a net inflow exceeding HKD 1.1 trillion this year, setting a new historical high. Driven by the technology narrative, domestic and foreign computing power investments continue to grow, and it is expected that mainland Chinese investors' demand for quality targets such as AI in Hong Kong stocks remains strong.

Focus on the pace of Federal Reserve interest rate cuts, progress in Sino-U.S. relations, and the implementation of stabilizing growth policies in mainland China

Due to the impact of the National Day and Mid-Autumn Festival holidays, the market is expected to briefly enter a "low season" mode, compounded by uncertainties surrounding the U.S. government's short-term financing bill, which may amplify overseas disturbances. Meanwhile, there are still differences in the market regarding the timing and extent of the Federal Reserve's interest rate cuts, and in the short term, the main tone may still be "conditional rate cuts," with fluctuating expectations potentially causing market volatility. Some quality sectors of Hong Kong stocks have valuations close to historical highs, and there is still pressure for profit-taking in the short term. Attention should be focused on the pace of Federal Reserve interest rate cuts, progress in Sino-U.S. relations, and the situation of stabilizing growth policies in mainland China.

Industry allocation continues the "high elasticity" + "high dividend" barbell strategy, with moderate adjustments combined with policy catalysts

Technology growth sector: The valuation repair logic of technology stocks is further strengthened in the environment of Federal Reserve interest rate cuts, and the demand for southbound funds to allocate to high prosperity sectors such as technology in Hong Kong stocks remains strong. Related targets in the AI industry chain benefit from the capital expenditures of global technology giants, especially with the continuous growth of computing power investments. It is recommended to focus on core beneficiaries such as AI hardware manufacturers and cloud service providers with independent innovation capabilities, but attention should be paid to the valuation digestion pressure of targets that have seen significant increases previously Biopharmaceutical Sector: In the global interest rate reduction environment, the valuation of the biopharmaceutical sector is expected to recover. Chinese innovative pharmaceutical companies are accelerating their overseas expansion, and the activity level of BD cooperation is increasing. It is recommended to pay attention to high-quality targets with a global layout and innovative pipelines.

High Dividend Defensive Allocation: The relative value of sectors such as banks, insurance, and utilities with high dividend yields is more prominent, serving as a stabilizer for portfolio allocation and providing continuous dividend income amid market fluctuations