China Securities Co., Ltd.: The mid-term trend of revaluation of Chinese assets confidence is expected to continue. The technology growth sector is still the main driver in the mid-term.

China Securities Co., Ltd. released a research report stating that in the short term, apart from technology, attention is increasing on the improvement signals of some A-share and Hong Kong stock pro-cyclical sectors on the margin, especially in areas with price increase expectations. The premium index of AH shares is accelerating towards the bottom level, indicating that the current Hong Kong stock market may be overheated in the short term and there is a need to be cautious of increased risks in volatility. Thanks to the progress and changes in the AI industry, the profit forecast level for the internet sector of Hong Kong stocks has been revised upwards from the end of last year, and performance realization is expected to drive the valuation of Hong Kong stocks in the medium term. From a global comparison and selection perspective, the mid-term trend of China's asset confidence revaluation is expected to continue, with the technology growth sector still being the main theme for the medium term. Industries to focus on recently include domestic computing power, consumer electronics, automotive intelligence, military industry, non-ferrous metals, service consumption, real estate, and steel, among others. Themes of interest include state-owned enterprise market cap management, Siasun Robot & Automation, and AI+. The Two Sessions meet expectations and solidify the foundation of "revaluation bull". The Two Sessions were held, and the government work report overall met expectations. The economic growth target was steady and pragmatic, with policy emphasis on breakthroughs and advancements, and macro policies continuing to be more active and focused on new productive forces and enhancing domestic demand policies. Information released during the five ministry press conferences shows that policies on technology innovation, supply optimization, and domestic consumption have received a warm reception. Marginal negativity in the overseas environment. The Federal Reserve's Beige Book shows that the overall trend of the U.S. economy in February is stagnant or slightly declining, with increased pessimism among businesses about the future, due to increasing uncertainties brought by the Trump administration, especially in terms of tariffs. In February, the U.S. non-farm payroll increased by 151,000, lower than the expected 160,000; the unemployment rate was 4.1%, higher than the expected and previous values of 4%. This week, the US dollar index experienced a significant drop, while market expectations for a rate cut by the Federal Reserve have increased. Hong Kong stocks may experience increased volatility in the short term, but still have performance and fund support in the medium term. The premium index of AH shares is accelerating towards the bottom level, indicating that the current Hong Kong stock market may be overheated in the short term and there is a need to be cautious of increased risks in volatility. Thanks to the progress and changes in the AI industry, the profit forecast level for the internet sector of Hong Kong stocks has been revised upwards from the end of last year, and performance realization is expected to drive the valuation of Hong Kong stocks in the medium term. In terms of funds, as of this year, the cumulative net inflow of southbound funds has approached 300 billion yuan, with the shareholding ratio of the Hong Kong stock connect in the Hong Kong stock market increasing from 10.6% to 11.2%, while international intermediary institutions have decreased from 43.9% to 43.5%, indicating that overseas funds may not have entered in large numbers yet. If the Eastern narrative of the AI industry continues to be verified, the domestic macroeconomic recovery process proceeds smoothly, the U.S. economy weakens and the Federal Reserve cuts rates, Hong Kong stocks, as a market that gathers many scarce Chinese assets, are likely to be favored by funds. Apart from the technology main theme, the auxiliary theme focuses on improving business conditions and expectations of price increases. In the medium term, the environment of stabilizing demand and shrinking supply leading to profit improvements and capital inflows remains unchanged, and the reform dividend in the capital market will continue. Under the consensus of industrial trends, the technology growth sector is still the main theme, and from a global comparison and selection perspective, the mid-term trend of China's asset confidence revaluation is expected to continue. In the medium term, "AI+" is still the main theme, with "artificial intelligence+" now transitioning to a stage of business validation and demonstrating strong growth potential and investment value. In addition to technology, signs of improvement on the margins in pro-cyclical sectors and the consumption sector are emerging, and the direction of some related sectors is worth watching, especially as the prices of many commodities, particularly various metal varieties, have started to strengthen. After the consolidation and stabilization, the direction of verifying the progress of real industrial prosperity remains worth watching.