CITIC Securities: Hong Kong stock investors are advised to prioritize quality sectors with strong defensive attributes and stable dividends, such as power.

CITIC Securities noted that with relatively limited total capital, technology and biotechnology, as two growth sectors in the Hong Kong stock market with higher elasticity and valuations more sensitive to liquidity, are more prone to forming a seesaw allocation relationship. At the same time, as southbound capital inflows were relatively weak in 2026, especially with foreign capital continuing to flow back into Hong Kong stocks since June, foreign capital dominated marginal pricing power. Therefore, against the backdrop of foreign capital continuously flowing out of Hang Seng Technology and into biotechnology, this drove the formation of a pattern in which Hang Seng Technology was relatively weak while biotechnology was relatively strong. Overall, under a high interest rate environment, both the Hang Seng Technology Index and the Hang Seng Biotechnology Index came under significant pressure. Under the current expectation of tightening global liquidity, investors are advised to prioritize quality sectors with strong defensive attributes and stable dividends, such as power, telecommunications, and utilities.