Zhi Tong Cai Jing·2025-08-31 02:12Core Viewpoint - The Federal Reserve is expected to enter a rate-cutting cycle, which may lead to continued upward movement in the Hong Kong stock market. The overall profitability of the Hong Kong market remains strong, with relatively scarce assets in sectors like internet, new consumption, and innovative pharmaceuticals. Despite several months of gains, the overall valuation of Hong Kong stocks remains low, indicating high long-term investment value [1][5][6]. A-share Market Summary - In August, major A-share indices experienced widespread gains, driven by improved market sentiment and policy catalysts. The STAR Market 50 index saw the largest increase of 21.4%, while the Shanghai Composite Index rose by 6.4%. Other indices like the CSI 300 and CSI 1000 also posted gains of 7.6% and 10.1%, respectively [1][2]. - The performance across industries was generally positive, with telecommunications, electronics, and comprehensive sectors leading the gains. The banking sector was the only one to decline during this period [1][2]. Investment Strategy - The investment strategy for the Hong Kong market suggests a "barbell" approach, focusing on technology growth and high dividend stocks. Key areas of interest include domestic policies supporting self-sufficiency in technology, chip manufacturing, and high-end manufacturing, as well as internet technology companies with independent growth prospects. High dividend, low volatility strategies in sectors like telecommunications, utilities, and banking are also recommended for stable returns [5][6]. Long-term Market Outlook - The long-term outlook for the A-share market remains positive, with no significant changes in the underlying support for stock market growth. Factors such as the potential for a Federal Reserve rate cut and a recovery in public fund issuance are expected to positively influence market performance. The current valuation levels are considered reasonable, with ample room for growth in financing balances [3][4]. - The focus for short-term investments should be on sectors that have lagged behind, with a particular emphasis on machinery, electrical equipment, and specific sub-sectors like engineering machinery and commercial vehicles. Long-term attention should be directed towards technology independence, domestic consumption, and high-quality dividend stocks [4].