Business strategy: After the preemptive rate cut by the Federal Reserve, A-shares and Hong Kong stocks often benefit from the improvement in the US dollar liquidity environment.

The Merchants Strategy Research Report pointed out that according to the economic background, the rate cut by the Federal Reserve can be divided into preventive rate cuts and crisis rate cuts, and the impact on asset performance of the two types of rate cuts is not the same. The resumption of rate cuts by the Federal Reserve in September 2025 is more in line with preventive rate cuts. Due to the relatively full market expectation for rate cuts in the previous period, the realization of rate cuts has triggered market volatility caused by profit-taking of funds. However, this rate cut is just the beginning, not the end. Expectations for future rate cuts may fluctuate repeatedly, and historically, A-shares and Hong Kong stocks tend to benefit from improved US dollar liquidity environment after preventive rate cuts. In addition, the driving factors of the current bull market phase II in A-shares have not changed, but the slope may have slowed down compared to the previous period.