Group 1 - The Hong Kong stock market has shown strong performance in 2023, with the Hang Seng Index and Hang Seng Tech Index rising by 29.09% and 25.60% respectively as of November 25 [1] - The performance in 2025 is expected to be driven by liquidity and sentiment, characterized by a chase for "scarce return assets" due to "excess liquidity" [2][6] - Despite the market's strong performance, overall earnings of listed companies in Hong Kong are slightly below initial expectations for 2025, with sectors like biopharmaceuticals and technology hardware showing resilience, while e-commerce and real estate face pressure [3] Group 2 - The liquidity environment is expected to remain accommodative in the first half of 2026, with potential interest rate cuts by the Federal Reserve, although long-term rates may stay high [3][4] - Southbound capital is projected to continue flowing into the Hong Kong market, with an estimated inflow of 600 billion HKD from public funds and insurance capital, alongside a potential 500 billion HKD from individual investors [3][4] - Investment preferences are shifting, with Southbound funds diversifying from high-dividend stocks to growth sectors, focusing on AI technology and structural recovery opportunities [4] Group 3 - The core macro theme for 2026 is expected to revolve around "excess liquidity chasing scarce return assets," with limited expansion of "scarce assets" [6] - Investment opportunities are identified in three main areas: AI-driven industry trends, cyclical recovery in production capacity, and export and commodity sectors related to global uncertainties [6] - Investors are advised to maintain flexibility in their strategies, balancing between chasing structural growth and managing market volatility [6]

Core Viewpoint - The Hong Kong stock market has shown strong performance in 2023, with the Hang Seng Index and Hang Seng Tech Index rising by 29.09% and 25.60% respectively, driven by liquidity and sentiment, and this trend is expected to continue into 2026 [1][2]. Group 1: Market Performance and Drivers - The Hong Kong stock market has outperformed globally in 2025, supported by trends in the AI industry and improvements in the domestic economic fundamentals [2]. - The core narrative for 2025 is the pursuit of "scarce return assets" driven by "excess liquidity," with funds flowing towards assets that can provide fixed returns during credit cycle contractions [2][3]. - Despite the strong market performance, the overall profitability of listed companies in Hong Kong is slightly below initial expectations for 2025, with sectors like biopharmaceuticals and technology hardware showing resilience, while e-commerce and real estate face significant pressure [3]. Group 2: Liquidity Outlook - The global liquidity environment is expected to remain loose in the first half of 2026, with potential interest rate cuts by the Federal Reserve, although long-term rates are projected to stay high at 3.8% to 4% [3]. - Southbound capital is anticipated to continue flowing into the Hong Kong market, with an expected inflow of 600 billion HKD from public funds and insurance capital, alongside a potential 500 billion HKD from individual investors [3][4]. Group 3: Investment Opportunities - Investment opportunities in 2026 are expected to focus on three main areas: AI-driven industry trends, cyclical recovery in production capacity, and sectors related to overseas uncertainties such as exports and commodities [5]. - The potential rise in China's PPI towards the end of 2023 and into early 2024 may trigger a market shift towards cyclical sectors [5]. - Investors are advised to maintain flexibility in their strategies, balancing between chasing structural growth and taking profits when market conditions become overheated [5].

Core Viewpoint - The Hong Kong stock market has shown strong performance in 2023, with the Hang Seng Index and Hang Seng Tech Index rising by 29.09% and 25.60% respectively, driven by liquidity and sentiment, and this trend is expected to continue into 2026 [1][2] Group 1: Market Performance and Drivers - The strong performance of the Hong Kong stock market in 2023 is attributed to "excess liquidity" chasing "scarce return assets," with valuation and sentiment playing a significant role [1][2] - Despite external uncertainties, the market has benefited from trends in the AI industry and improvements in the domestic economic fundamentals [1][2] - The overall profitability of listed companies in Hong Kong is slightly below initial expectations for 2023, with sectors like biopharmaceuticals and technology hardware showing resilience, while e-commerce and real estate face more significant pressures [2] Group 2: Future Liquidity and Investment Strategies - The liquidity environment is expected to remain ample in the first half of 2026, with potential interest rate cuts by the Federal Reserve, although the long-term interest rate is projected to stay high at 3.8% to 4% [2][3] - Southbound capital is anticipated to continue flowing into the Hong Kong market, with an expected inflow of 600 billion HKD from public funds and insurance capital, and 500 billion HKD from individual investors [3] - Investment preferences are shifting from high-dividend sectors to growth areas, with a focus on AI technology and sectors benefiting from overseas demand [3] Group 3: Investment Opportunities - Key investment directions for 2026 include AI-driven industry trends, capacity cycle reversals, and sectors related to export and commodities amid global uncertainties [4][5] - Investors are advised to maintain flexibility in their strategies, balancing between chasing structural growth and taking profits when market conditions become overheated [5]