Zhi Tong Cai Jing·2025-09-18 00:47Core Viewpoint - The expectation of a preventive interest rate cut by the Federal Reserve in September has highlighted the value of core asset allocation in the Hong Kong stock market [1][4]. Group 1: Federal Reserve's Interest Rate Cut - The Federal Reserve's past interest rate cuts have significantly boosted the Hong Kong stock market in the short term, with the exception of the unique circumstances in 2019 and 2020 [1][3]. - The current economic conditions in the U.S. show signs of cooling employment but resilient economic fundamentals, indicating that the rate cut aims to address potential risks [1][4]. - Market expectations for a 25bps or 50bps rate cut in September are at 89% and 11%, respectively, with a general forecast of 2-3 rate cuts in 2025 [2]. Group 2: Impact on Hong Kong Stock Market - The impact of the Federal Reserve's rate cuts on the Hong Kong stock market is characterized by two types: preventive and relief cuts, with different effects on foreign capital flows [2][3]. - In preventive rate cuts, the resilience of the U.S. economy may suppress the liquidity easing effects, leading to limited foreign capital inflow into Hong Kong [2]. - Conversely, relief rate cuts may initially attract foreign capital due to a weakening U.S. economy, but long-term outflows may occur due to declining global risk appetite [2][3]. Group 3: Investment Opportunities - The current preventive rate cut is expected to provide marginal support to the Hong Kong stock market, particularly benefiting growth sectors such as technology, consumer discretionary, and pharmaceuticals [4]. - The potential for synchronized monetary easing between the U.S. and China could lead to increased foreign capital inflow into Hong Kong stocks, especially as active foreign capital has been returning to China since August [4]. - The allocation of foreign capital to Chinese assets remains low at 7.0%, indicating significant room for growth as China's economic stabilization policies take effect [4].