Huatai Securities: Fund rebalancing in volatility, Hong Kong stocks expected to outperform historical data.

Huatai Securities' mid-term outlook states that data shows when US stocks are only experiencing a small adjustment, the correlation between Hong Kong and US stocks as well as the decline in Hong Kong stocks are lower. Additionally, there is still room for reassessment of the RMB and RMB assets in this round, and we are optimistic about the relative performance of the Hong Kong stock market. The main driving factors in the second half of the year come from profit growth, with the estimated operating profit growth of non-financial sectors of overseas Chinese stocks at around 7%, showing a "U-shaped" recovery. In terms of industry selection, market volatility in the third quarter may still be high, and high dividend stocks and essential consumption can still be considered as core asset allocations. From a full-year perspective, if the expansion and increased allocation of Hong Kong stocks are more certain, the third quarter volatility would provide entry opportunities, and it is recommended to increase allocations in technology and consumption on dips, while large financials should still be part of the core asset allocation.