EB SECURITIES: Hong Kong stocks may show a volatile trend, but the long-term allocation cost-effectiveness of assets such as new consumer and innovative drugs remains relatively high.

EB SECURITIES released a research report stating that in the short term, in the context of difficulty in continuing to relax liquidity, combined with disruptions in A-share financial disclosures, uncertainties in US-China relations, and other events, risk appetite may be somewhat suppressed and the Hong Kong stock market may present a volatile trend. Long-term view, Hong Kong stocks have relatively strong overall profitability, and assets such as the internet, new consumption, and innovative medicines are relatively scarce. Combined with current undervaluation, the long-term cost-effectiveness of allocation is still high. EB SECURITIES recommends focusing on technology growth and high dividend "dumbbell" strategies. 1) Focus on the concepts related to autonomous controllable, chips, and high-end manufacturing that may continue to benefit from domestic support policies under the backdrop of US-China competition. 2) Focus on internet technology companies with independent economic cycles. 3) Continue to focus on high dividend low volatility strategies, including industries such as communication, utilities, and banking. High dividend strategy can still be used as a stable income base. June A-share and Hong Kong stock markets have seen some rebound In June, the main indexes of A-shares generally rose, with differential performance in industries. Influenced by factors such as improved market sentiment, as of June 26, A-share main indexes generally saw an increase, with the ChiNext Index having the largest increase, rising by 6.1% in June. Industries saw differing performances, with communication, non-bank finance, banking, and non-ferrous metals performing well, while the consumer sector, such as food and beverage, beauty and personal care, and home appliances, had poorer performance. The Hong Kong stock market fluctuated upward in June. Influenced by factors such as easing of overseas disturbances and rebound in domestic risk appetite, the Hong Kong stock market as a whole saw a fluctuating upward trend in June. As of June 26, 2025, the Hang Seng Hong Kong 35, Hang Seng Composite Index, Hang Seng Index, Hang Seng H-Share Index ETF index, and Hang Seng Technology saw increases of 5.0%, 4.8%, 4.4%, 4.4%, and 3.4% respectively. A-share viewpoint: focus on performance trends and stable assets It is expected that the index will maintain a fluctuating trend. While the worst of short-term external risk disturbances may have passed, caution should still be exercised regarding the future policies of Trump. Domestically, policies are still actively being enforced, and it is expected that future policies will continue to be implemented. With China and the US pressing the "pause button" on the "equal tariff", exports may remain high in the short term, and consumption is expected to be an important driver of economic recovery. With internal and external factors intertwined, the index is expected to maintain a fluctuating trend in the future. In terms of allocation, focus on performance trends and stable assets. With the upcoming financial reporting season, sectors with good performance may have a good showing, as indicated by current analyst expectations for high growth in industries such as steel, computers, power equipment, and national defense. Stable assets such as high dividends and gold are still worth paying attention to, as historically high dividend sectors have shown good performance in times other than rapid market growth phases.