CICC: Still maintains the judgment of the overall volatile trend of the Hong Kong stock market, intervene at the bottom of the downturn, and profit on the right side of the excitement.

CICC released a research report stating that it still maintains its judgment of the overall volatile situation in the Hong Kong stock market, with external disturbances, especially uncertainty in the future path of the Federal Reserve. However, technical indicators show that the Hong Kong stock market is currently in a relatively neutral state, with HSI ERP, short selling ratio, and RSI all at the levels of the rebound period at the end of September. Against this background, at the level of allocation, it is recommended to focus on 1) supply clearance, 2) policy support, and 3) stable returns. The following is a summary of the research report: Looking back over the past month, the market once again staged a familiar "high and low" trend that has been seen frequently in recent years, turning around and returning to the starting point of a month ago. In late November, we hinted that the expectation of overly strong policies may still not be realistic, and the market has not completely escaped the volatile situation, maintaining a strategy of entering at the low end and taking profits on the exuberant right side. The performance in the past period has also confirmed this view. Last week, the hawkish interest rate cut by the Federal Reserve led to a rapid rise in US bond yields and the US dollar index, while the expectation of domestic monetary easing pushed domestic interest rates significantly lower. We believe that new highs in US bonds often correspond to a tightening of US dollar liquidity, putting pressure on the valuation of Hong Kong stocks from the denominator end. Even though the new low of Chinese bonds may hedge against the rise of US bonds from the denominator end, the numerator end reflects the pressure of growth expectations. Therefore, overall, the combination of "new highs in US bonds + new lows in Chinese bonds" is a neutral to slightly negative influence on Hong Kong stocks, as historical experience often bears out. In conclusion, we still maintain our judgment of the overall volatile situation in the Hong Kong stock market for three main reasons: firstly, with the important domestic window period coming to an end, the market is entering a policy vacuum period before the two sessions; secondly, external disturbances, especially uncertainty about the future path of the Federal Reserve, persist. However, technical indicators show that the Hong Kong stock market is currently in a relatively neutral state, with HSI ERP, short selling ratio, and RSI all at the levels of the rebound period at the end of September. In this context, at the level of allocation, it is recommended to focus on 1) supply clearance, 2) policy support, and 3) stable returns. Looking ahead, external shocks, especially the different situations of tariffs after Trump's inauguration and domestic policy responses, will determine the market path. 1) If tariffs are implemented progressively (initial tariffs of 30-40%), the impact on the market is expected to be limited, and investors are advised to maintain the current volatile structure. 2) If tariffs are raised to the maximum of 60%, the market may face significant disturbances. However, we believe that such a situation may actually provide a better buying opportunity.