CITIC SEC: A-share bottoming out is expected to accelerate, Hong Kong stocks are expected to recover on a monthly basis.

CITIC Securities released a strategic report pointing out that after the "risk management-style" interest rate cut, the US dollar has entered a rate-cutting cycle, with the first rate cut slightly exceeding expectations at 50 basis points. This has improved expectations for the renminbi exchange rate and also increased the flexibility of domestic monetary policy. It is expected that incremental policies will be intensified. The A-share market, which is currently in the process of bottoming out with improved pricing efficiency, is expected to accelerate, while Hong Kong stocks, which have fully reflected pessimistic expectations, are likely to continue their rebound and become a monthly-level recovery market. Firstly, the opening of the rate-cutting cycle with a 50 basis points rate cut is a result of the Fed balancing expectation management and risk response. With the "data-dependent decision-making" centered on the unemployment rate, it is expected that the Fed will cut rates by 25 basis points twice more this year. Secondly, the rate cut of the US dollar has significantly improved expectations for the renminbi exchange rate and increased the flexibility of domestic monetary policy. There has been increased volatility in domestic policy expectations, and the effects of existing policies and the intensification of incremental policies still need to be observed. Lastly, the US dollar entering a rate-cutting cycle is beneficial for the valuation of global risk assets. Hong Kong stocks, which are currently significantly undervalued and have fully reflected pessimistic expectations, are still attractive. Their recent rebound is expected to continue as a monthly-level recovery market. Expectations for the renminbi exchange rate have significantly improved, incremental policies are expected to be intensified, and the A-share market, with improved pricing efficiency in its bottoming-out process, is also expected to speed up. However, it is still necessary to patiently wait for market turning point signals, with the current focus still on dividend and going global strategies.