Weekly Market Outlook – Weekly Market Strategy Report

I. Hong Kong Market Recap: Technology and Consumer Sectors Lead Gains

Broad market performance was positive: Over the past week, major Hong Kong stock indices posted solid gains, with the Hang Seng Index rising 3.69% and the Hang Seng Tech Index climbing 4.31%. Sectors tied to daily consumption and technology delivered the strongest performance.

Drivers of the rally: This Hong Kong market rally was primarily driven by 'global portfolio rebalancing.' Investors are rotating positions—pulling capital out of overseas AI hardware sectors, which had previously seen significant gains and appeared crowded—and reallocating into the Hong Kong market, where valuations currently offer better value.

Sentiment toward tech stocks received a boost: The latest earnings reports from major U.S. cloud companies show robust revenue growth in AI-related businesses, which has effectively boosted investor sentiment in Hong Kong-listed internet and AI application sectors.

II. Overseas Economic Outlook: U.S. Economy Shows Resilience; Rate Cut Prospects Remain Uncertain

Strong Domestic Demand Drives Economic Growth: Although the U.S. economy’s overall Q2 growth came in slightly below expectations—primarily due to weaker exports—consumer spending and corporate investment in AI remain very strong, underscoring the underlying resilience of the domestic economy.

Inflation Eases Short-Term but Remains Elevated: U.S. inflation data for June showed the first monthly decline since 2020, yet core inflation remains above the Federal Reserve’s target. Coupled with recent geopolitical tensions that could push energy prices higher, there remains a risk of inflation rebounding.

Implications for Investors: Given the complex U.S. economic picture—slowing growth but strong domestic demand, and moderating yet still elevated inflation—the Federal Reserve’s future rate policy path lacks clear direction for now. This uncertainty may trigger short-term market volatility, but ongoing U.S. corporate investment in AI will continue to provide strong support for global tech sectors.

III. China’s Economy and Policy: Enhanced Policy Support

Corporate Profits Continue to Improve: In the first half of this year, both revenue and profits of mainland industrial enterprises reached their highest levels in recent years, reflecting a recovery in corporate profitability.

Short-term weather and external challenges: The Manufacturing Purchasing Managers' Index (PMI) dipped slightly below the 50% mark in July, primarily due to disruptions from extreme weather events (such as typhoons and heavy rain) affecting production, as well as overseas geopolitical conflicts dampening some demand.

Policy support expected to intensify: In response to challenges during the economic recovery, the Political Bureau meeting of the Central Committee in July sent positive signals, emphasizing stronger policy support. More measures to boost consumption and expand investment are expected in the second half of the year, injecting fresh momentum into the economy and benefiting the earnings outlook of Hong Kong-listed companies.

IV. Outlook and Investment Strategy: Three Robust Themes for Strategic Allocation

Entering August, the selling pressure previously caused by the expiration of share lock-up periods will ease significantly, improving market liquidity and supporting further valuation recovery in Hong Kong stocks. As companies begin releasing their interim results, those demonstrating solid earnings growth are likely to gain greater market favor. We recommend focusing on the following three investment themes:

Internet Leaders and AI Applications: Leading large internet platforms, with their competitive edge, are poised to start generating profits from AI cloud services. Coupled with an easing price war in core businesses, their upcoming interim results are expected to show strong performance.

Innovative Drug Sector: Following the recent price correction, valuations in the innovative drug sector have become quite attractive. As progress is made in new drug development and overseas market expansion, its long-term investment value is emerging.

Defensive high-dividend stocks: In times of market volatility, high-dividend stocks in sectors such as financials and utilities act as 'safe havens' in your portfolio. They offer stable cash flows and relatively high dividends, providing solid downside protection; meanwhile, certain commodity-related sectors may also benefit from the potential upside in commodity prices driven by geopolitical tensions.

5. Key Macro Events to Watch This Week

Risk Warning:

This document is for informational purposes only and does not constitute an offer or solicitation to buy or sell any investment products, nor does it provide any advice or recommendations. The information contained herein has not taken into account your specific investment objectives, financial situation, or personal needs and should not be relied upon as a substitute for professional advice. You should seek independent professional advice before making any investment decision.

Investment involves risks, including the possible loss of principal. Past performance does not indicate future fund returns. The value of fund units may go up or down, and future returns are not guaranteed. Investors should read the fund's offering documents, including its prospectus and risk factors, before investing. You may obtain the Hong Kong offering information for the fund at the following website: https://www.fullgoal.com.hk/en (the content of this website has not been reviewed by the Securities and Futures Commission).

This material is issued by Fullgoal Asset Management (Hong Kong) Limited and has not been reviewed by the Securities and Futures Commission of Hong Kong. Certain information in this document is sourced from third parties believed to be reliable; however, we make no representation or warranty as to its accuracy, completeness, or timeliness.

The above information is for reference only. If you intend to purchase related fund products, please pay attention to investor suitability requirements, complete a risk assessment in advance, and select fund products with a risk rating that matches your own risk tolerance.

$BABA-W (09988.HK)$ $TENCENT (00700.HK)$ $XIAOMI-W (01810.HK)$ $MINIMAX-W (00100.HK)$ $KB LAMINATES (01888.HK)$ $Z.AI (02513.HK)$ $SMIC (00981.HK)$ $ZJ INNOLIGHT (03308.HK)$ $MEITUAN-W (03690.HK)$ $KUAISHOU-W (01024.HK)$ $Fullgoal HangSeng HK High Dividend ETF (03031.HK)$

140K Views