Core Viewpoint - The Hong Kong stock market has undergone significant changes over the past year, with the Hang Seng Index (HSI) currently valued at 11.4 times earnings, which is above the average since 2015, indicating that it is not considered "cheap" [1] Group 1: Market Valuation and Expectations - The current market valuation is heavily reliant on earnings recovery rather than further expansion of valuation multiples or risk premiums [1] - Under a baseline scenario, if the weighted risk-free rate decreases from 3.4% to 3.1%, and if the technology and internet sectors see a return to their low risk premiums, the valuation upside could be around 5-7% [1] - In an optimistic scenario, if policies stimulate price recovery, there could be over 15% upside in valuations if other sectors also see a drop in risk premiums [1] Group 2: Profit Growth Projections - Under baseline assumptions, the projected profit growth for Hong Kong stocks is 3% for 2026, with non-financial sectors expected to grow by 6-7% and financial sectors projected to have zero growth [2] - The expected index levels for the HSI are between 28,000 to 29,000 points under baseline conditions, with optimistic and pessimistic scenarios projecting 31,000 and 21,000 points respectively [2] Group 3: Investment Strategy Recommendations - The company suggests maintaining a focus on dividend-paying assets to navigate the weak overall credit cycle, indicating a need for continued monetary easing [2] - In a weak credit expansion environment, the company recommends focusing on sectors that can still expand credit, particularly in AI technology, emerging industries, and those linked to U.S. demand [2] - Specific sectors recommended for overweight positions include AI software and hardware, new energy, chemicals, home furnishings, and innovative pharmaceuticals, while underweight positions are suggested for real estate, food retail, and personal household goods [3]

Dollar Index - The dollar index showed an upward trend on Thursday, reaching a high of 98.66 and a low of 98.155, closing at 98.632 [1] - The market experienced support and a subsequent rise during the early session, with significant movement observed before and after the European trading session [1] - Key support levels to watch include 98.30, which if maintained, could lead to a continuation of the bullish trend [1] Gold Market - Gold prices experienced a decline on Thursday, with a high of 3352.05 and a low of 3325.06, closing at 3338.43 [3] - The market showed weakness after failing to break through key resistance levels, indicating potential for further declines if support levels are breached [4] - The focus remains on the 3350 resistance level, with a bearish outlook unless significant upward movement occurs [4] Euro/USD - The Euro/USD pair also saw a downward trend on Thursday, with a low of 1.1600 and a high of 1.1662, closing at 1.1604 [6] - The market is currently supported at the 1.1590 level, with a cautious outlook on potential corrections in the ongoing bullish trend [6] - Key resistance levels to monitor include 1.1650, with further declines expected if the 1.1590 support is broken [6] Economic Data and Events - Key economic data and events to watch include the UK Gfk consumer confidence index, Japan's core CPI, and the final GDP figures from Germany [8] - The market will also be attentive to remarks from Federal Reserve Chairman Jerome Powell, which could influence market sentiment [8]

Core Viewpoint - In July 2025, major asset performance was led by the ChiNext Index, followed by oil and the CSI 500, with a general upward trend in risk assets, particularly in Chinese markets, while commodities showed mixed results [1][2][14]. Group 1: Asset Performance - In July, risk assets mostly rose, with Chinese assets leading the way and U.S. stocks reaching new highs, while domestic commodities experienced low-level increases [2][14]. - The performance of commodities was predominantly positive, with oil prices rising due to multiple favorable factors, while copper prices retreated due to lower-than-expected copper tariffs [2][17]. - The three major U.S. stock indices closed higher, with technology stocks showing significant resilience due to strong earnings reports [2][19]. Group 2: Macroeconomic Insights - The macroeconomic landscape in July 2025 was characterized by a divergence between hard and soft data in the U.S., while China's soft data indicated a slowdown [4][62]. - The domestic "stock-bond seesaw" effect deepened, with the total A-share index rising by 4.7% in July, while the yield on 10-year government bonds increased by 5.75 basis points to 1.71% [2][32]. Group 3: Key Drivers of Equity Assets - Future drivers for equity assets may include "profitability and risk appetite," with A-shares needing to respond to fundamental factors such as PPI trends and mid-year earnings [5][62]. - The reduction of uncertainties surrounding U.S.-China tariffs could enhance short-term export certainty, as recent high-level trade talks indicated a potential extension of tariff measures [5][62]. - New technological themes, such as advancements in artificial intelligence, are expected to create investment opportunities [5][62]. Group 4: Market Timing Signals - The M1-BCI-PPI timing system indicated a slight improvement in overall positive signals despite a slowdown in actual GDP growth [6][62]. - The stock-bond valuation ratio showed a return to neutrality, suggesting that while equity assets have lost some advantage, the overall score still leans towards equities [7][62]. Group 5: Sector Performance - In July, over 90% of industries in the domestic market reported positive returns, with growth and cyclical sectors leading the gains, particularly in steel, pharmaceuticals, and construction materials [2][32][44]. - The real estate sector saw a widening year-on-year decline in sales, with second-hand home sales showing more resilience compared to new homes [2][42]. Group 6: Commodity Market Dynamics - The commodity market showed a general upward trend in July, with significant increases in domestic pricing for black metals and polysilicon, while international oil and copper prices exhibited mixed performance [17][62]. - The Brent crude oil futures price increased by 7.3% in July, driven by geopolitical factors and tariff negotiations, although it faced a pullback in early August [17][62].