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CICC Predicts 3 Rate Cuts in US Next Yr; Southbound Funds to Continue to Flow into HK Stock Mkt, Potentially Extending Structural Mkt Condition
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Despite facing overseas uncertainties, the Hong Kong equity market has been driven by AI industry trends and improvements in domestic economic fundamentals this year, supported by internal and external liquidity, Kevin Liu, Chief Offshore China and Overseas Strategist at CICC Research, said. Valuation and sentiment dominated the market, while capital inflows also had a boosting effect. Liu explained that the Hong Kong stock market's performance this year is characterized by the pursuit of excess liquidity for scarce return assets. He noted that, when the credit cycle contracts, most assets lack returns, and funds will flow towards assets that can provide fixed returns. When the credit cycle partially recovers, a structural trend emerges. Looking ahead to 2026, Liu expected the global liquidity environment to remain loose in 1H26, but there are variables in 2H26. He anticipated that the Fed may conduct 3 rate cuts next year, but the long-term interest rate pivot will remain at a relatively high level of 3.8-4%. Regarding the Hong Kong stock market, Liu projected that southbound funds will continue to flow in next year, focusing on AI technology, output clearance, overseas demand and other areas. The situation of abundant liquidity will continue, but scarce assets will not spread widely, and the market will be more driven by structural prosperity. AASTOCKS Financial News Website: www.aastocks.com |
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