Group 1 - The core view is that the Hong Kong stock market in 2026 will experience valuation contraction combined with profit growth, with leading sectors identified as those undergoing bottom reversal and those benefiting from strengthened industrial trends or long-term logic [1] - The technology sector is highlighted for its mid-to-long-term investment value, with short-term pullbacks providing better allocation opportunities for investors [1] - Key indices such as the Hang Seng Technology Index and the Hang Seng Index show a long-term upward momentum, and the current short-term pullback is seen as a favorable entry point from an institutional allocation perspective [1] Group 2 - The fundamentals driving the Hong Kong technology sector are clear, with the Hong Kong Stock Connect gathering core domestic AI assets across the entire industry chain, including computing power, models, software applications, and hardware terminals [2] - The emergence of DeepSeek is expected to reposition Chinese technology companies in the global competitive landscape, leading to a reassessment of investment opportunities by domestic and foreign investors, which may narrow the valuation gap between Chinese and U.S. tech stocks [2] - It is anticipated that southbound capital will continue to flow into the Hong Kong stock market in 2026, supported by the correlation of Hong Kong stocks with overseas liquidity and the expected continuation of a loose monetary trend following the Federal Reserve's new rate cut cycle starting in September 2025 [2]

Global Market Overview - The global market experienced a decline from November 17 to November 21, 2025, with overall valuation contraction. Only the Indian SENSEX30 saw an increase of 0.79%. Major Asian indices, particularly Hong Kong, fell over 5%, while the German market in the Eurozone saw the most significant drop. The Nasdaq 100 in the US had the largest correction at -3.07% [2][7] - Valuations generally contracted alongside stock prices, with the Nikkei 225 and the Korean Composite Index showing slight PE expansions of 1.58x and 1.80x, respectively, indicating downward revisions in earnings expectations [2][9] A-share Market Analysis - The A-share market saw a comprehensive decline in core broad-based indices, with the National Index 2000 leading the drop at -6.24% and the CSI 1000 at -5.80%. The Shanghai Stock Exchange 50 had the smallest decline at -2.72% [2][28] - All valuation metrics contracted with stock prices, particularly the CSI 2000, which saw a significant PE contraction of 10.75x. As of November 21, 2025, major A-share indices' PE, PB, and PS were positioned between the 74%-82% percentile range for the past year [2][29] Industry Valuation Trends - All primary industries experienced declines, with the power equipment sector leading the drop at -10.54%. The upstream resource sectors, including basic chemicals, steel, and non-ferrous metals, also saw significant corrections [2][53] - The valuation contraction was substantial, with power equipment and comprehensive PE shrinking by over 4x, while sectors like retail, electronics, and real estate saw PE reductions exceeding 3x [2][53] Consumer Sector Valuation - The downstream consumer sector exhibited superior valuation attractiveness. In the short-term view, only the oil and petrochemical sector had a valuation percentile above 90%, currently at 96.9%. In the medium to long-term perspective, sectors like electronics and communications maintained relatively high valuations, with 3-year and 5-year percentile averages above 90% [2][55]