Core Viewpoint - The article discusses the significant market reactions following the announcement of reciprocal tariffs by the U.S. and China's subsequent countermeasures, highlighting the volatility in the Hong Kong stock market and the implications for investors [1][3][4]. Market Reaction - Following the announcement of tariffs, the Hang Seng Index experienced a record single-day drop of 13.2%, the largest since the 21st century, while the Hang Seng Tech Index fell by 17.2%, marking its biggest decline since its inception in 2014 [1]. - In the subsequent days, the market rebounded due to positive signals from the central government and record inflows from southbound funds, but the overall decline for the Hang Seng Index reached 8.5% for the week, the largest weekly drop since 2018 [1][3]. Sector Performance - The consumer discretionary sector faced the most pressure, declining by 10.7%, followed by media and entertainment at 10.4%, and insurance at 10.1%. Conversely, the essential consumer sector saw a slight increase of 0.4% [1]. Valuation Insights - The article notes that the Hang Seng Tech Index's dynamic P/E ratio fell from 19.1x in mid-March to 14.0x, below the three-year average, indicating a potential buying opportunity in tech stocks [6]. - The article also highlights that the AH premium has increased from a low of 128% to 142%, suggesting a relative advantage for Hong Kong stocks compared to A-shares [10][12]. Future Outlook - The article emphasizes that the market's focus may shift from tariff numbers to the actual impact on growth and earnings, with the need for domestic policy support becoming crucial [9][12]. - It suggests that if domestic demand policies are timely and effective, the negative impact on earnings from tariff increases may be mitigated [14]. Capital Flows - Southbound funds have become a significant driver of the market, with record inflows observed, indicating strong interest from investors looking to "buy the dip" in Hong Kong stocks [17]. - In contrast, active foreign capital has been flowing out, with a notable outflow of $6.9 billion in the past week, suggesting a cautious stance from long-term foreign investors amid escalating trade tensions [19]. Investment Strategy - The article recommends that investors who have already reduced their positions or shifted to dividend-paying stocks may consider gradually buying at current levels, while those with higher exposure should maintain flexibility [24]. - It identifies technology stocks with supportive narratives and low export exposure as key investment themes, alongside dividend assets [24].

Core Viewpoint - The article discusses the impact of the US-China tariff war on the fashion industry, highlighting the need for companies to adapt their supply chains and production strategies to mitigate risks and maintain competitiveness in a changing landscape [4][16]. Supply Chain Dynamics - The textile industry is experiencing a migration of production from China to countries like Vietnam, Cambodia, and Bangladesh, driven by rising labor costs and regulatory changes in China [5][6]. - The COVID-19 pandemic accelerated this shift, prompting brands to diversify their supply chains and avoid over-reliance on a single country [6][16]. - The concept of "China +1" has emerged, where companies maintain production in China while also establishing additional bases in other countries to enhance resilience [6][7]. Nearshoring Trends - Many companies are exploring "nearshoring," which involves relocating production closer to key consumer markets to reduce shipping times and costs [7][8]. - European luxury brands, such as Hermès and LVMH, are increasingly investing in local production to enhance brand image and maintain product quality [8]. Case Studies: Adidas and Zara - Adidas is shifting towards a "market-oriented supply chain regionalization," focusing on local production in China and other non-sensitive regions to mitigate tariff risks [10][12]. - Zara's parent company, Inditex, maintains a high level of in-house production in Europe, allowing for rapid response to market demands and higher profit margins compared to competitors [13][14]. Strategic Shifts in Fashion Retail - The fashion retail industry is transitioning from a focus on absolute low costs to building supply chain resilience, balancing cost, speed, and risk [14][16]. - Both Adidas and Zara exemplify different approaches to navigating the challenges posed by tariffs and changing consumer preferences, with Adidas focusing on regionalization and Zara on centralized production [14][15].