Weekly Market Outlook - Market Strategy Weekly Report

The broader market is consolidating amid volatility, with capital flows favoring defensive strategies

Major HK stock indices rose across the board last week. Market styles showed significant divergence: the tech sector was under pressure due to high-level fluctuations in US Treasury yields; however, driven by concerns over US dollar credibility, geopolitical risks, and energy security,Resource sectors such as gold and non-ferrous metals, along with innovative drugs,have become the most prominent market themes.

1. Weekly Market Review

Performance of Major Indices

Hang Seng Index: Up 3.55%

Hang Seng China Enterprises Index: Up 3.52%

Hang Seng TECH Index: Up 1.24%

Hang Seng Stock Connect Hong Kong Index: Up 3.26%

Sector Performance

Top-performing sectors: Raw Materials (+9.72%), Energy (+5.33%), Healthcare (+5.27%).

Laggards: Consumer Staples (+0.46%), Telecommunications (+0.58%), Consumer Discretionary (+1.63%).

Fund Flows

This week, Southbound funds (Stock Connect) recorded a net sell-off of approximately HKD 11.584 billion。

II. Key Market Drivers

Commodities and Gold Remain Strong

Safe-Haven and Reserve Demand: Persistent market concerns over US long-term debt and the credibility of the US dollar have prompted global capital and central banks to increase gold holdings as non-sovereign reserve assets.

Tight supply and demand for industrial metals: Metals such as copper, aluminum, and lithium are constrained by mining supply limits. Coupled with emerging demand from AI data centers and power grid construction, prices remain supported.

Support from energy security policies: Geopolitical tensions in the Middle East are affecting crude oil transportation, while the advancement of national energy security strategies continues to reinforce the medium-to-long-term value of the oil and gas sector.

The innovative drug sector sees dual benefits

Breakthroughs in R&D results: Promising progress in Phase III clinical trials for overseas cancer vaccines has boosted market confidence in the commercialization prospects of innovative drugs.

Release of policy dividends: Mainland China's medical insurance planning proposes exploring independent pricing for new drugs and diversified payment mechanisms, which is expected to improve long-term profitability expectations for the industry.

Continued optimization of the Hong Kong stock trading ecosystem

In the first half of the year, Hong Kong ranked as the world's second-largest IPO fundraising market, with the average daily turnover in the cash market reaching HKD 283 billion, a record high for the same period.

The Stock Connect mechanism has been further deepened, with mainland insurance institutions supported in investing in exchange-traded funds (ETFs) listed on the Hong Kong Exchange, providing stable medium- to long-term liquidity to the market.

Macroeconomic and Policy Expectations

Major economic data from the mainland in July showed a slowing pace of economic recovery, but production and investment in high-tech industries remained strong, highlighting a divergence between new and old growth drivers.

Fiscal and financial policies aimed at boosting domestic demand are expected to be introduced in the second half of the year, with the market anticipating the gradual implementation of specific measures to stabilize growth.

3. Key Directions for Asset Allocation

Given the current market environment, investors may consider a balanced approach that combines offensive and defensive strategies, focusing on the following four main themes:

4. Key Short-Term Focus for the Market Outlook

Corporate Interim Results: Monitor upcoming interim report disclosures to assess companies' ability to deliver on earnings expectations.

Pacing of policies to boost domestic demand: Monitor the progress of mainland China's Q3 policies to expand domestic demand and the advancement of major projects.

Signals from overseas central bank symposiums: Pay attention to policy statements at the upcoming global central bank symposiums and the impact of US Treasury yield trends on market liquidity.

V. Key Macro Events to Watch Next 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 potential loss of principal. Past performance does not indicate future fund returns. The value of fund units may rise or fall, and future returns are not guaranteed. Investors should read the fund's offering documents, including its prospectus and risk factors, before investing. Relevant fund information is available at https://www.fullgoal.com.hk/en (the content of this website has not been reviewed by the SFC).

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 wish to purchase relevant fund products, please pay attention to investor suitability management regulations, complete a risk assessment in advance, and select fund products with a risk rating that matches your own risk tolerance.

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