Asset Allocation Outlook for July: Go with the flow and prepare for change

Soochow released its asset allocation outlook for July, predicting that the A-share market will experience a volatile adjustment pattern in July. In the short term, due to momentum effects, the market may continue to rise, but may enter a period of adjustment afterwards. The overall pace of the Hong Kong stock market is in line with the A-share market, but the chip structure of A-shares is better than that of Hong Kong stocks. The Hang Seng AH Premium Index at a low point reversal indicates reduced attractiveness of Hong Kong stocks, with A-shares possibly outperforming Hong Kong stocks and showing wide-ranging volatile trends. Style and sector performance: In early July, growth styles may be relatively dominant, while dividend sectors may be relatively volatile. In the mid to late July, growth styles may face headwinds as momentum effects fade and uncertainty about tariffs increases. The dividend style may further highlight its advantages, but attention should be paid to the early impact of domestic and international events on style changes. Internal and external factors: More favorable policies need to be awaited in the short term domestically; internationally, on July 9 the temporary tariff suspension deadline expires, the probability of a Fed rate cut in July is low, and attention should be paid to new events such as decisions from the International Trade Court that may drive style changes. Hedging effects of US stocks and gold may still play out: US stock market: Risk trend models show that US stock risk levels are high, and a volatile trend is expected in July. On July 9, the temporary tariff suspension deadline expires, and the subsequent negotiation results and policy changes will continue to have short-term impacts on the market. Gold market: Risk levels are moderate, with no apparent overvaluation or undervaluation in the short term. Expectations of interest rate cuts are rising, and the volatility range is expected to narrow and gradually strengthen. Overall trend: US stocks and gold are expected to maintain a reverse volatile pattern, awaiting events such as geopolitical changes, policy changes, and US economic data releases to act as catalysts. Government bonds and US bonds - stable progress, leaning towards volatility: Overall trend: Both boosted by loose expectations and risk aversion sentiment, but domestic recovery + policy flexibility and US inflation stickiness + debt supply differences, interest rates overall oscillate lower. Government bond market: Economic slow recovery supports policy easing to maintain confidence, with clear expectations of improved liquidity post-quarter-end and foreign capital inflows supporting allocation demand, forming a basis for lower interest rates. US bond market: External uncertainties boosting risk aversion sentiment support interest rate declines, but constrained by supply pressures and policy swings, limiting the extent of the downward volatility. Mutual fund allocation recommendations - relatively balanced allocation: Expecting the market to potentially experience a volatile adjustment trend in the future, it is recommended to have a balanced allocation and wait for the right timing. Risk warning: Occurrence of unexpected major macro events; macro data falling short of expectations; risks of model failure in changing market environments.