Market Overview - The Hong Kong stock market showed mixed performance with the Hang Seng Index rising by 0.4% to 22,867.74, marking its seventh consecutive gain, while the Hang Seng Tech Index fell by 0.93% to below 5,200 points [1][2]. Major Indices Performance - The Hang Seng Index closed at 22,867.74, up by 91.82 points or 0.40% [2]. - The Hang Seng China Enterprises Index increased slightly by 0.1% to 8,308.83 [2]. - The Hang Seng Tech Index dropped to 5,180.25, down by 48.66 points or 0.93% [2]. Sector Performance - Large tech stocks mostly underperformed, with Kuaishou down 2.35%, NetEase down over 1%, while Alibaba rose approximately 2% and Xiaomi increased by 1% [2]. - Semiconductor stocks experienced significant declines, with SMIC and Hua Hong Semiconductor falling by 4.76% and 7.94% respectively [3][13]. - Defense stocks saw a collective pullback, with AVIC down over 5% and China Shipbuilding down over 4% [4][14]. - Retail stocks led gains, with Prada up nearly 5% and Chow Tai Fook up nearly 4% [5][6]. - Food stocks also performed well, with Uni-President China rising over 9% [7]. - Wind power stocks continued their upward trend, with Goldwind Technology up over 4% [8]. - Port transportation stocks saw increases, with China Merchants Port up over 4% [9]. - Consumer electronics stocks were active, with TCL Electronics rising over 5% [10]. - Oil stocks increased, with China Petroleum and CNOOC both rising over 1% [11]. - Banking stocks also saw gains, with Chongqing Rural Commercial Bank up over 4% [12]. Capital Flows - Southbound funds recorded a net inflow of HKD 4.044 billion, with the Shanghai-Hong Kong Stock Connect contributing HKD 3.246 billion and the Shenzhen-Hong Kong Stock Connect contributing HKD 798 million [16]. Future Outlook - Guotai Junan Hong Kong suggests that after the recent recovery, the Hong Kong stock market may maintain a sideways consolidation in the short term, with international trade negotiations expected to be complex and uncertain [18]. - The investment strategy recommends a focus on dividend styles as a base, with a gradual shift towards sectors supported by domestic policies, including semiconductors, electronics, and innovative pharmaceuticals [18].

Core Viewpoint - The article emphasizes the need to adapt investment strategies in response to changing global trade dynamics, focusing on domestic consumption and sectors less affected by international trade tensions [2][24]. Group 1: Non-Export Industries - Non-export industries are characterized by having a complete domestic supply chain, with products or services produced and consumed within the country, making them less directly impacted by tariff changes [5][6]. - Key sectors include finance, real estate, public utilities, and transportation, which are expected to benefit from stable domestic demand despite external pressures [6][7]. Group 2: Domestic Demand-Related Industries - There is significant potential for growth in domestic demand-related industries, such as food and beverage, tourism, agriculture, and pharmaceuticals, driven by government policies aimed at boosting internal consumption [8][10]. - The World Bank reports that in 2023, China's final consumption expenditure accounted for 55.6% of GDP, which is 17.4 percentage points lower than the global average, indicating room for growth [8]. Group 3: Rare Earth and Military Industries - The rare earth sector is crucial for military applications and has a significant strategic advantage, as China controls 49% of global rare earth reserves and 90% of refining capacity, making it a key player in global supply chains [14][16]. - Military strength is seen as essential for protecting economic interests, with the military-industrial complex being a focus for investment [16][17]. Group 4: Self-Sufficiency and Control - The emphasis on self-sufficiency highlights the importance of mastering core technologies across various sectors, particularly in semiconductors, high-end chips, and industrial machinery, to mitigate external dependencies [19][20]. - Recent advancements in domestic technology, such as breakthroughs in semiconductor equipment, underscore the urgency of achieving technological independence [19][20]. Group 5: Artificial Intelligence - Artificial intelligence is identified as a critical area for future competition between major powers, with the potential to transform various industries and drive economic growth [21][23]. - China's advantages in AI include a large internet user base and a strong talent pool, positioning it well for advancements in this field [23].