Core Viewpoint - The liquidity in the Hong Kong stock market is currently supported by both international and domestic factors, with a notable influence from the US dollar index and the ongoing interest rate cuts by the Federal Reserve [1]. International Factors - The Hong Kong stock market is particularly sensitive to changes in the US Federal Reserve's monetary policy due to its currency peg to the US dollar, which amplifies the spillover effects of US monetary policy [1]. - Historical data indicates a significant negative correlation between the Hang Seng Index and the US dollar index, suggesting that a weaker dollar leads to increased international capital inflow into Hong Kong stocks [1]. - The Federal Reserve is expected to continue its rate-cutting cycle, with predictions of two additional cuts by 2025, which historically correlates with strong stock performance during such periods [1]. Domestic Factors - Southbound capital has become a stabilizing force in the Hong Kong stock market, with a cumulative net inflow exceeding 1 trillion HKD since the beginning of the year [1]. - Key sectors attracting this inflow include commerce and retail (including e-commerce), telecommunications, electronics, media, and computer technology, driven by ongoing domestic policy support for technological innovation and a rebound in global tech sectors like AI [1]. - The simultaneous inflow of domestic and international funds provides robust liquidity support for the technology sector in the Hong Kong stock market [1]. Relevant ETFs - The Hong Kong Stock Connect Technology ETF (159101) covers the entire technology industry chain [1]. - The Hang Seng Internet ETF (513330) focuses on leading internet companies [1].

Group 1 - The Hong Kong stock market is experiencing dual support from both international and domestic liquidity [1] - The Hang Seng Index shows a significant negative correlation with the US dollar index, indicating that a weaker dollar leads to increased international capital inflow into Hong Kong stocks [1] - The market anticipates a potential interest rate cut in September, with expectations of two more cuts by the Federal Reserve by 2025, which historically has led to positive performance in the Hong Kong stock market [1] Group 2 - Southbound capital has become a stabilizing force in the Hong Kong stock market, with a cumulative net inflow exceeding 1 trillion Hong Kong dollars since the beginning of the year [1] - Key sectors attracting net inflows include commerce and retail (including e-commerce), telecommunications, electronics, media, and computer technology, driven by domestic policy support for technological innovation and a global recovery in the AI sector [1] - The combined efforts of domestic and international capital are providing solid liquidity support for the technology sector in the Hong Kong stock market [1]