Core Insights - The global economic and trade landscape is undergoing rapid restructuring, with finance playing an increasingly vital role in modern economies [1] - The 8th China International Import Expo and the "Financial Empowering Global Economic Development" forum highlighted China's commitment to high-level financial openness and global resource connectivity [1] Group 1: Shanghai's Financial Center Development - Shanghai is accelerating its development as an international financial center, supported by various government initiatives and documents aimed at enhancing financial openness [3] - The total trading volume in Shanghai's financial market reached 29.6783 trillion yuan from January to September this year, marking a 12.7% year-on-year increase [5] - Shanghai aims to build a cross-border investment and financing bridge, leveraging its free trade zone and new areas to facilitate cross-border financial services [5][6] Group 2: Global Trade and Financial Cooperation - The global trade and investment landscape is experiencing profound adjustments, yet cross-border trade remains a key driver of economic growth [7] - China is expanding its high-level openness and quality development, with retail sales expected to exceed 50 trillion yuan this year, maintaining its position as the world's second-largest consumer and import market [7] - Financial institutions are encouraged to provide diverse financial services to support foreign trade enterprises and enhance bilateral investment cooperation [7][8] Group 3: RMB Internationalization - The restructuring of global trade relations is timely for advancing the international use of the RMB, with banks encouraged to enhance offshore RMB product offerings [9] - The People's Bank of China has implemented measures to facilitate cross-border RMB transactions, reducing approval processes and enhancing efficiency [9][10] - Innovations in cross-border financial services are being developed to address the needs of enterprises engaged in international trade, improving their efficiency and risk management capabilities [10]

Market Performance - In October 2025, global stock markets experienced a general uptrend, with the Dow Jones, S&P 500, and Nasdaq rising approximately 2% to 5%[4] - The Hang Seng Index and Hang Seng Tech Index saw declines of 3.5% and 8.6%, respectively, indicating a low point for Hong Kong stocks[4] Sector Performance - The Hang Seng industry indices showed a structural divergence, with defensive sectors like Energy (up 6.6%) and Utilities (up 3.6%) performing well, while Information Technology and Healthcare sectors fell significantly by 8.7% and 11.0%[8] - The financial sector also showed slight strength, contributing to the overall mixed performance of the market[8] IPO and Financing Activity - In October 2025, the Hong Kong IPO market saw 12 new listings, raising approximately HKD 27.71 billion, primarily driven by two large tech companies[12] - The first-day performance of new stocks was strong, with a first-day loss rate of only 8.3% and one stock, Jinye International Group, surging 330% on its debut[12] Macroeconomic Indicators - In the U.S., the manufacturing PMI for October was reported at 52.2, and the services PMI at 55.2, both showing improvement from September[14] - The consumer confidence index in the U.S. fell to a five-month low of 53.6, indicating a decline in consumer sentiment[14] Chinese Economic Outlook - China's GDP growth slowed to 4.8% year-on-year in Q3 2025, down from 5.4% in Q1 and 5.2% in Q2, with industrial output growth improving to 6.5%[16] - The "14th Five-Year Plan" emphasizes technological self-reliance and high-level opening-up, aiming to boost emerging industries and innovation[16] Investment Strategy - Hong Kong stocks are viewed as having relative valuation advantages globally, with a favorable liquidity environment expected to support valuation recovery[18] - Investors are advised to focus on sectors with high growth potential, such as technology, and those likely to benefit from policy support, including new energy and consumer sectors[18]

Market Performance - Global equity markets experienced a broad rally, with MSCI Global up by 1.9%, MSCI Developed Markets also up by 1.9%, and MSCI Emerging Markets rising by 2.2% [4][8] - Among developed markets, the South Korean Composite Index showed the strongest performance with a gain of 5.1%, while the Australian S&P 200 had the weakest performance with a gain of only 0.3% [8] - In emerging markets, the ChiNext Index performed best with an increase of 8.0%, while the Mexican MXX Index was the worst performer, declining by 1.0% [8] Trading Sentiment - Overall trading volume decreased across global markets, with the VIX index showing a rapid decline [19] - In terms of investor sentiment, the short-selling ratio in Hong Kong stocks decreased to 15.8%, indicating a historical low sentiment level, while the North American sentiment index rose to 90.4%, reflecting a high sentiment level [19][26] Earnings Expectations - The earnings expectations for the US tech sector were revised upward during the earnings season, with the S&P 500's EPS forecast for 2025 adjusted from 268 to 269 [63] - The Hong Kong market also saw an upward revision in earnings expectations, with the Hang Seng Index's EPS forecast for 2025 increased from 2059 to 2061 [63] - In contrast, the European market's earnings expectations remained flat, with the STOXX50 Index's EPS forecast for 2025 unchanged at 332 [64] Economic Outlook - Major market economic sentiment indicators showed improvement, with the Citigroup Economic Surprise Index for the US, Europe, and China all rising [4][63] - The rise in these indices was attributed to factors such as the potential end of the US government shutdown, easing inflation expectations, and improved US-China negotiations [4] Fund Flows - The market is increasingly pricing in two rate cuts by the Federal Reserve within the year, with expectations confirmed by recent economic data [46][50] - In terms of liquidity, there was a notable inflow of funds into the US, China, India, Japan, and South Korea, with a total inflow of 210 billion USD into these markets in September [55][58]

Core Viewpoint - The significant drop in the Indonesian stock market on October 27 was primarily triggered by concerns over potential adjustments to the MSCI Indonesia Index's stock weightings, as indicated in a report by MSCI [1][2]. Group 1: Market Reaction - The Indonesian Composite Index experienced its largest decline in over six months, with a maximum drop of 3.8%, while the MSCI Indonesia Index fell by 2.52% [1]. - Major companies saw their stock prices decline, including PT Barito Renewables Energy Tbk (BREN) down 14.99%, PT Bank Central Asia Tbk (BBCA) down 0.91%, and PT Dian Swastatika Sentosa Tbk (DSSA) down 12.12% [1]. Group 2: MSCI Report Insights - MSCI is considering using monthly shareholder registration data from the Indonesian Central Securities Depository (KSEI) to determine the free float of Indonesian listed companies, although this plan is not yet finalized [3]. - The consultation period for this proposal is expected to last until December 31, 2025, with final results to be announced on January 30, 2026, and implemented in the index adjustments in May 2026 [3]. Group 3: Methodology Considerations - The consideration to use KSEI data stems from its detailed classification of shareholders into corporate and individual categories, although KSEI data will not be directly used for calculating free float [5]. - MSCI is also exploring a more comprehensive approach to assess Indonesian stocks, which may involve excluding scrip-based shares from the free float calculation [6]. Group 4: Potential Impact on Funds - Analysts predict that if the index is adjusted according to the new rules, the adjustment could range from 5% to 13%, implying that fund managers tracking the MSCI Indonesia Index may need to adjust their portfolio holdings by approximately 5% to 13% [7]. - There are currently five ETFs tracking the MSCI Indonesia Index, although specific sizes of these funds have not been disclosed [7][8].

Investment Rating - The report maintains an "Outperform" rating for the Hong Kong stock market [4] Core Insights - The overall market has rebounded, with the technology sector leading the gains, as evidenced by the Hang Seng Index rising by 3.6% and the Hang Seng Composite Index also increasing by 3.6% [1] - The valuation levels have returned to a relatively high level, with the Hang Seng Index's forward P/E ratio increasing by 3.4% to 12.1x [2] - Earnings expectations have been rapidly revised upwards, with the Hang Seng Index's EPS increasing by 0.5% [3] Summary by Sections Market Performance - The Hang Seng Index increased by 3.6%, with large-cap stocks outperforming mid and small-cap stocks [1] - The Hang Seng Internet Index rose by 5.9%, while the Hang Seng Biotechnology Index fell by 0.9% [1] Valuation Levels - The forward P/E ratio for the Hang Seng Index is now at 12.1x, reflecting a 3.4% increase [2] - The Hang Seng Internet Index saw a significant valuation increase of 5.9%, reaching 19.0x [2] Earnings Expectations - The EPS for the Hang Seng Index has been revised upwards by 0.5% [3] - The largest upward revision in EPS was seen in the Hang Seng Consumer Index, which increased by 1.8% [3]

- The "Hong Kong Stock Selection Portfolio" aims to construct a portfolio by dual-layer screening based on fundamental and technical aspects of stocks recommended by analysts. The portfolio is built using analyst recommendation events such as upward earnings forecast revisions, initial coverage, and unexpected research report titles. Stocks with both fundamental support and technical resonance are selected to form the portfolio. The backtesting period is from January 1, 2010, to June 30, 2025, with an annualized return of 19.11% and an excess return of 18.48% relative to the Hang Seng Index[14][15][19] - The "Stable New High Stock Screening Method" identifies stocks that have reached new highs in the past 20 trading days. The screening criteria include analyst attention, relative stock strength, price path stability, and continuity of new highs. The calculation for the 250-day new high distance is as follows: $ 250 \text{ Day New High Distance} = 1 - \frac{\text{Close}_{t}}{\text{ts\_max}(\text{Close}, 250)} $ where $\text{Close}_{t}$ represents the latest closing price, and $\text{ts\_max}(\text{Close}, 250)$ is the maximum closing price over the past 250 trading days. A new high distance of 0 indicates the latest closing price has reached a new high, while a positive value indicates the degree of fallback from the new high[20][22][23] - The screening process for stable new high stocks involves selecting stocks from the entire Hong Kong stock pool (excluding stocks listed for less than 15 months). Stocks are filtered based on analyst attention (at least 5 buy or overweight ratings in the past 6 months), relative stock strength (top 20% in 250-day returns), and price stability. The final selection is based on price path smoothness and the average 250-day new high distance over the past 120 days and the past 5 days[23][22][20] - The backtesting results for the "Hong Kong Stock Selection Portfolio" show annualized returns of 19.11%, excess returns of 18.48%, and various performance metrics such as IR (1.22), tracking error (14.55%), and maximum drawdown (23.73%). The portfolio demonstrates consistent outperformance across different years, with notable returns in 2020 (66.59% absolute return, 70% excess return) and 2019 (42.85% absolute return, 33.78% excess return)[19][15][17]

Core Viewpoint - The U.S. and South Korea are accelerating negotiations on a $350 billion investment agreement, shifting focus from currency swap concerns to investment structure design, with a potential finalization during the APEC summit next week [1][2]. Investment Structure - The South Korean government is prioritizing a balanced investment scheme that may include direct investments, loans, and guarantees, with the necessity and scale of currency swaps depending on the final agreement structure [2][3]. - South Korea aims to finalize the agreement during the APEC summit, with the government committed to achieving this goal [2][3]. Tariff Disadvantages - Ongoing negotiations have been slow, with South Korea facing a 25% tariff on automobiles compared to Japan's 15%, putting Korean automakers at a competitive disadvantage [3][4]. - The potential loss of zero-tariff status for South Korean automotive exports to the U.S. raises concerns, as both countries may be subjected to a new 15% tariff framework [3][4]. Feasibility Concerns - The scale of the investment commitments from both the U.S. and Japan raises questions about feasibility, with the $350 billion commitment equating to 6.5% of South Korea's GDP, needing to be completed within three years [5][6]. - The investment model, which allows the U.S. government to control funds without congressional oversight, has sparked concerns about resource misallocation and corruption opportunities [6]. Governance Risks - The investment funds may lead to significant resource misallocation and potential corruption, as political pressures could influence funding decisions towards enterprises aligned with presidential and Republican interests [6]. - The lack of precedent for allowing a president to freely allocate billions in investments raises governance concerns, especially given the political accountability of Japanese and South Korean officials [6].

Core Insights - The report by Grant Thornton (Hong Kong) indicates an improvement in ESG reporting among large listed companies in Hong Kong, particularly in climate-related disclosures and green finance, although many companies remain unprepared [1][2][3] ESG Reporting and Compliance - In 2024, 95% of large Hang Seng Index constituent companies disclosed climate-related risks, a 6% increase from 2023 [2] - Only 10% of companies are fully prepared to provide comprehensive disclosures with accurate quantitative data, adhering to recognized frameworks and third-party verification [1][2] - 41% of large companies are inadequately prepared for new ESG disclosure regulations, raising concerns about vague disclosures and insufficient information, especially in risk management and climate goals [1][2] Green Finance Developments - Ten large Hang Seng Index companies reported green financing exceeding HKD 50 billion in 2024, a 20% increase from the previous year, indicating rapid maturation in Hong Kong's sustainable finance sector [3] - 39% of large companies mentioned green finance tools in their ESG reports, a 3% increase year-on-year [3] - 78% of green finance issuance in 2024 exceeded HKD 10 billion, reflecting a growing market momentum and the importance of sustainable capital allocation in high-carbon, capital-intensive industries [4] Technology and Data Management - Over half (58%) of large Hang Seng Index companies reported deploying or planning to deploy AI technology to enhance the accuracy of ESG data collection and reporting [1][5] - 92% of companies emphasized cybersecurity in their ESG reports, a significant 10% increase from 2023 [5] - Only 69% of companies disclosed AI-related training or IT skill enhancement plans, highlighting a significant gap in aligning AI applications with emerging global standards [5][6] Future Outlook and Recommendations - Companies are urged to shift focus from the quantity of ESG reporting to the quality, including investing in robust data systems and independent verification [6] - The upcoming mandatory climate disclosure regulations necessitate that Hong Kong listed companies accelerate their ESG transformation efforts [6]

Core Points - India is nearing a trade agreement with the United States that could significantly reduce punitive tariffs on Indian exports from 50% to 15-16% [1] - The agreement aims to increase bilateral trade to $500 billion by 2030, with initial results expected between October and November [1][5] - Key negotiation topics include energy and agriculture, with India potentially agreeing to reduce oil imports from Russia in exchange for tariff concessions [1][3] Trade Impact - The punitive tariffs have severely impacted Indian exports, with a report indicating a 20.3% month-over-month decline in September, bringing exports to $5.5 billion [2] - Since May, Indian exports to the U.S. have dropped by over $3.3 billion, highlighting the direct effects of the tariff increases [2] - Key sectors affected include textiles, gems and jewelry, engineering products, and chemicals, creating significant pressure on these industries [2] Political Pressure - President Trump has intensified political pressure on India, linking oil imports from Russia to potential further tariff increases [3] - Trump claimed that Indian Prime Minister Modi had assured him of stopping Russian oil purchases, a statement India has strongly denied [3] Negotiation Environment - Despite the tensions, trade negotiations are reportedly progressing in a "friendly atmosphere" [4] - Indian officials emphasize the need to protect the interests of farmers, fishermen, and small businesses during negotiations [5] - India has set "red lines" in areas such as agriculture, small and medium enterprises, digital trade, e-commerce, and intellectual property [6]

Group 1: Market Performance Review - The Hong Kong stock market experienced a significant decline due to renewed US-China trade tensions and profit-taking after previous gains, with the Hang Seng Index, Hang Seng Tech Index, and Hang Seng Composite Index dropping by -4.11%, -3.97%, and -7.98% respectively [3][10][13] - Defensive sectors such as utilities and telecommunications showed resilience, while previously high-performing sectors like technology and healthcare faced substantial corrections [3][10][13] Group 2: Market Valuation Levels - As of the end of the week, the 5-year PE (TTM) valuation percentile for the Hang Seng Composite Index stood at 81.45%, indicating that the valuation level is close to one standard deviation above the 5-year average [3] Group 3: Market Macro Environment - The macroeconomic environment shows weak inflation in September, with CPI down by 0.3% year-on-year, while PPI decreased by 2.3% [37][43] - The central bank's monetary policy remains supportive, with a focus on enhancing domestic demand and stabilizing growth through proactive measures [37][43] Group 4: Fund Flow Analysis - Southbound capital showed strong buying interest, with a net inflow of 45.089 billion HKD, marking a new high in five weeks and maintaining a streak of 22 consecutive weeks of net inflows [43] - The top net buying companies included Pop Mart, Xiaomi, and China Mobile, indicating a preference for consumer discretionary and technology sectors [32] Group 5: Sector Allocation Outlook - The report favors sectors that are relatively prosperous and benefit from policy support, such as automotive, new consumption, innovative pharmaceuticals, and technology [3][43] - Low-valuation state-owned enterprises and local Hong Kong banks, telecommunications, and utility stocks are also highlighted as stable performers benefiting from the interest rate cut cycle [3][43]