Di Yi Cai Jing·2025-12-31 00:17Group 1 - The core viewpoint is that under the backdrop of loose monetary policies both domestically and internationally, foreign capital and southbound funds are expected to continue their net inflow trend, leading to a substantial improvement in the profitability of Hong Kong-listed companies, with the market anticipated to experience both profit and valuation increases by 2026 [1] Group 2 - In terms of investment themes, the focus should be on technology innovation, as the goal of significantly enhancing self-reliance in technology during the 14th Five-Year Plan period will drive investment in this area. The Hang Seng Technology Index has considerable room for valuation recovery, and leading companies are expected to show high growth characteristics [1] - The cyclical industries are also highlighted, where the deepening supply-side reform policies are expected to optimize the supply-demand dynamics in sectors such as steel, building materials, electrical equipment, and paper, leading to steady improvements in capacity utilization and gross margins [1] - The consumption theme is emphasized under the strategy of expanding domestic demand, with expected growth in performance and valuations at historically low levels, particularly in sectors like service consumption, "trade-in" programs, and new consumption [1] - Overall, the investment strategy for Hong Kong stocks in 2026 should focus on the flow of funds ("water") and the quality of performance ("quality"), with a high sensitivity to global liquidity, domestic policy implementation, and corporate profit recovery [1]