Huatai Securities' Hong Kong Stock Strategy: Index relatively stable, sector rotation strengthens.

Huatai Securities research report stated that the Hong Kong stock market has seen a rebound in the past two months, with current levels approaching the high point of the first quarter of 2025. Looking ahead, from the perspective of interest rates, risk premiums, and profits, the market may lack the basis for a significant short-term increase. In addition, uncertainties in the global economy and geopolitical environment in the third quarter remain high. Huatai Securities believes that the index may return to volatility in the short term. With increasing attention from domestic and foreign investors on Chinese assets and the trend of increasing allocation brought by the expansion of the Hong Kong stock market, the market's downside risk is relatively controllable, but the importance of sector rotation is rising. In terms of specific allocation, maintaining a medium-term strategy, market volatility may be higher in the third quarter. Dividend and essential consumer sectors of the Hong Kong stock market can still be used as core holdings, balancing defense and odds. High prosperity industries such as consumer, healthcare, and technology may continue to rise, and market volatility may provide opportunities for increased allocation.