BOCHK: Market adjusting interest rate cut expectations, expected Hang Seng Index to stabilize and rise after reaching the 16,000 level

Director Zhang Shiqi of the Wealth Strategy and Analysis Department of Bank of China Hong Kong stated that the market is adjusting its expectations for interest rate cuts, and the Hang Seng Index has recently experienced some adjustments. Despite the significant magnitude of the adjustments, its valuation is supported. It is not ruled out that Hong Kong stocks may rebound after the market sentiment improves. It is expected that the Hang Seng Index will stabilize and rise after reaching the 16,000 point level. Currently, defensive sectors are preferred, including utilities and telecommunications. She pointed out that the market has already priced in the start of the U.S. interest rate cut cycle, with stock market volatility increasing. The performance of U.S. stocks has fully reflected the expectation of an "economic soft landing," however, the effects of high interest rates have a lag. Attention should be paid to the impact of the cyclical effects of employment, income, consumption, and corporate profits on U.S. stocks after the interest rate cut. It is expected that U.S. stocks may show a trend of rising first and then falling in the third quarter, with an expected increase in volatility. From a technical perspective, U.S. stocks have not entered the "overbought" stage, while Japanese stocks have already entered the "overbought" stage. She mentioned that the Chinese economy is stabilizing and improving, and A-shares are expected to stabilize and rise. Currently, Chinese A-shares have advantages in both horizontal and vertical valuations. The Federal Reserve's initiation of an interest rate cut cycle, the stabilization and improvement of the Chinese economy, and loose liquidity are favorable for increasing the valuation of Chinese A-shares. She added that based on past experience, gold is expected to rise to around $2,500 before and after the interest rate cut