Report Overview - The report is a weekly strategy report on overseas equities (Hong Kong and US stocks) by Guotai Junan Futures, covering market trends, investment strategies, and industry outlooks [1] Investment Ratings - No investment ratings are provided in the report Core Views - For US stocks, maintain an optimistic view, continue the allocation idea of technology circle - shrinking and cyclical sectors, and focus on AI technology, healthcare, utilities, finance, materials, and consumer sectors. In the AI field, hardware is preferred over software [5] - For Chinese - funded stocks, in the short - term, the style may switch from themes to high - quality growth or low - level sectors. In the medium - term, Hong Kong stocks maintain a barbell strategy, focusing on technology assets, some new energy sectors, and the non - ferrous metals sector [12] Summary by Relevant Content US Stocks - **Market Performance**: This week, the AI hardware and AI power sectors led the rise, with hardware outperforming software. The "shrinking circle" differentiation of the technology sector has further intensified [3][5] - **Investment Strategy**: In 2026, the market style will be more balanced. Focus on "technology circle - shrinking" and theme investment opportunities in "physical AI". The K - shaped differentiation between Mag7 and Ex - Mag7, and between the S&P 500 and Russell 2000 is expected to gradually converge. Prioritize upstream infrastructure in AI technology over downstream software [5] - **AI Bubble**: It is a local rather than a systematic bubble. The market is currently punishing individual companies with aggressive capital expenditures. The technology industry may be at a position similar to that in 1997 from the ROIC perspective [27] Chinese - Funded Stocks - **Market Sentiment**: Recently, under regulatory guidance, sentiment has cooled. Southbound funds' trading volume proportion has increased at the beginning of the year [7][8] - **Market Performance**: In the short - term, the spring rally in the A - share market has started, and Hong Kong stocks have shown a supplementary increase. In the medium - to long - term, the A - share market may have greater elasticity than the Hong Kong stock market [10] - **Investment Strategy**: - Short - term: The style may switch, and it is recommended to focus on technology and cyclical sectors with high performance certainty [12] - Medium - term: For Hong Kong stocks, maintain a barbell strategy, focusing on technology assets, new energy sectors, and non - ferrous metals sectors [12] A - Share Market - **Performance Forecast**: As of January 16, stocks with expected profit growth of over 100% are mainly concentrated in the electronics, basic chemicals, pharmaceutical biology, and power equipment industries [13] Valuation Analysis - **Hong Kong Stocks**: The forward PE of the Hang Seng Index is 12 times, approaching the mean + 1 STD since 2015. The forward PE of the Hang Seng Tech Index is 21.9 times, approaching the mean in the past five years. The ERP of the Hang Seng Index is 4.7%, and the ERP of the Hang Seng Tech Index is 0.9% [15][16] - **US Stocks**: Analyze the odds from the forward PE perspective, and the overall credit spread of the US stock market and the technology sector remains low [23]

Report Overview - The report is a weekly strategy report on overseas equity (Hong Kong and US stocks) by Guotai Junan Futures, dated January 11, 2026 [1][2] 1. Investment Ratings - No specific industry investment ratings are provided in the report 2. Core Views - For US stocks, maintain an optimistic outlook, continue with the technology + cyclical allocation strategy, and expect a more balanced market style in 2026 with a "shrinking circle" structure in the technology sector [3] - For Chinese stocks, in the short term, A-shares have better profit - making effects than Hong Kong stocks, and attention should be paid to the subsequent catch - up opportunities in Hong Kong stocks. In the medium term, Hong Kong stocks maintain a barbell strategy [4][7] 3. Summary by Sections US Stocks - **Market Performance and Outlook**: This week, cyclical sectors led the rise in US stocks, and the technology sector continued its "shrinking circle" structure. Next week, the US stock market will face earnings season and inflation data. The outlook remains optimistic, and the technology + cyclical allocation strategy continues [3] - **2026 Allocation Ideas**: The market style will be more balanced, and the K - shaped divergence between technology and non - technology, large - cap and small - cap stocks is expected to converge. Focus on AI technology, healthcare, utilities, finance, materials, and consumer sectors. Prioritize upstream infrastructure in AI technology over downstream software, and pay attention to theme investment opportunities in physical AI [3] - **Valuation**: US stock valuations are still relatively high overall [14] - **AI Bubble**: It is a local rather than a systematic bubble. The market is punishing individual companies with aggressive capital expenditures. Currently, it may be close to the 1997 position from the perspective of the technology industry's ROIC. Monitor the "ROIC - WACC" convergence trend and the divergence between "financing growth" and "profit growth" [20][22] Chinese Stocks - **Market Performance and Outlook**: This week, A - shares outperformed Hong Kong stocks. A - shares' performance was strong in some sectors with high performance certainty and theme - concept sectors. Southbound funds' entry momentum increased, and the pattern may be A - shares leading and Hong Kong stocks catching up. February is the month with the highest winning rate for A - shares historically [4][6][7] - **Short - term Allocation**: Defensively allocate sectors with high performance certainty (AI hardware, new energy leaders, and non - ferrous metals), and offensively allocate valuation - driven sectors (Hang Seng Technology, Hong Kong innovative drugs, commercial aerospace, and robotics) [7] - **Medium - term Allocation for Hong Kong Stocks**: Adopt a barbell strategy, focusing on technology assets with clear industrial trends supported by policies, some new energy sectors with supply - side clearance and demand - side improvement, and non - ferrous sectors benefiting from supply shortages, strong structural demand, and interest rate cuts [7] Odds Analysis - **Hong Kong Stocks**: The forward PE of the Hang Seng Index is 11.8 times, approaching the mean + 1STD since 2015. The forward PE of the Hang Seng Tech Index is 21.4 times, approaching the mean of the past 5 years. The Hang Seng Index ERP is 4.9%, and the Hang Seng Tech Index ERP is 1.1% [9][10]