Group 1: Market Performance and Drivers - In the first half of 2025, the Hong Kong stock market experienced a strong structural bull market, driven by technology revaluation and AI breakthroughs[2] - The rebound was supported by four main factors: reduced geopolitical risks, a weak dollar environment boosting the RMB, significant liquidity injections by the HKMA, and accelerated inflows from southbound funds[2] - Southbound funds saw a dramatic increase, with a cumulative net purchase of HKD 14.5 trillion, 2.9 times last year's figure, indicating a shift towards diversified allocations beyond financial stocks[26] Group 2: Future Outlook and Risks - The structural bull market is expected to remain resilient, supported by the undervaluation of the RMB and the ongoing inflow of southbound funds, particularly into stable high-dividend bank stocks[2] - Potential short-term volatility may arise from a rebound in the dollar and uncertainties in US-China relations, but the pressure on the RMB is expected to be manageable[3] - Risks include the possibility of the Federal Reserve's interest rate cuts falling short of expectations, domestic fundamentals declining unexpectedly, and renewed tariff pressures from the US[4]

Group 1 - The core viewpoint is that Hong Kong stocks have shown increased resilience this year, with a deeper transition from bear to bull market, characterized by a sustained rise in the market bottom and improved trading volume, establishing a preliminary virtuous cycle between the primary and secondary markets [1] - Investment logic is shifting from valuation repair to a revaluation based on new productive forces and high-quality development, leading to significant improvements in risk-return profiles and investability [1] - The second half of the year is expected to be a critical phase for establishing the structural bull market in Hong Kong stocks, with key variables focusing on six dimensions including trade negotiations, the implementation of the U.S. "Great American Rescue Plan," and the Federal Reserve's potential interest rate cuts [1] Group 2 - The Federal Reserve may restart interest rate cuts between September and December, with the August monetary policy framework review and the Jackson Hole summit likely paving the way for this move [2] - There remains a high degree of uncertainty regarding the medium-term monetary easing space, particularly concerning the interest rate path forecast for 2026 [2] - Major risk factors include uncertainties in trade negotiations, the risk of unexpected downturns in the U.S. economy, fiscal and debt risks in the U.S. and Japan, geopolitical tensions, and natural disasters [2]