Core Viewpoint - The report from CITIC Securities indicates that abundant liquidity and ongoing investments in AI are the two main drivers behind the sustained rise of Hong Kong stocks since early September [1] Group 1: Market Dynamics - The "wealth effect" in Hong Kong stocks is expected to continue attracting southbound capital inflows [1] - The potential election of a new Japanese Prime Minister, if successful, could lead to arbitrage trading by Japanese investors benefiting Hong Kong stocks [1] - The ongoing capital expenditure by domestic and international companies in the AI sector, along with continuous iterations and innovations in large models and applications, may lead to performance realization in Hong Kong's complete AI and technology industry chain [1] Group 2: Valuation and Future Outlook - After six months of valuation expansion, the current absolute valuation of Hong Kong stocks is considered not cheap [1] - However, with fundamentals expected to bottom out and a significant increase in earnings projected for 2026, Hong Kong stocks still hold considerable attractiveness on a global scale [1] - The report predicts that the long bull market for Hong Kong stocks since early 2024 will continue, driven by liquidity spillover effects and sustained AI narratives [1] Group 3: Investment Recommendations - Investors are advised to focus on four key long-term directions: 1) Technology sector, including AI-related sub-sectors and consumer electronics [1] 2) Healthcare sector, particularly biotechnology [1] 3) Non-ferrous metals benefiting from rising overseas inflation expectations and de-dollarization [1] 4) Consumer sector, which is expected to see valuation recovery amid further domestic economic recovery [1]

Group 1 - The optical module sector has shown strong performance, with stocks like New Yisheng increasing by 597% since April 8, and a 27-fold increase over the past three years [1] - The liquor sector, particularly brands like Moutai, Wuliangye, and Luzhou Laojiao, has underperformed, with an average decline of 22% over the past three years [1] - A significant market debate arose on September 5, where a prominent buyer questioned the profit forecast of 25 billion yuan for Zhongji Xuchuang by 2027, arguing that such high profits are unrealistic for component manufacturing companies [1] Group 2 - The A-share market experienced volatility, with a notable rebound on Friday after a sharp decline on Thursday, marking a 6.55% increase in the ChiNext index [1] - Analysts suggest that the current A-share market lacks significant speculation, indicating a stabilizing trend, with expectations for the Shanghai Composite Index to exceed 4000 points by year-end [1] - A report from Industrial Securities predicts a "super long bull" market for Hong Kong stocks, with potential highs around 28,000 points for the Hang Seng Index by November [1]