Everbright Securities: The Federal Reserve's interest rate cut cycle has begun, and Hong Kong stocks may continue to fluctuate upward in the future

According to the Zhitong Finance APP, Everbright Securities released a research report stating that the A-share and Hong Kong stock markets performed fluctuating in October. The overall profitability of the Hong Kong stock market is relatively strong, while assets such as the internet, new consumption, and innovative drugs are relatively scarce. In addition, although the Hong Kong stock market has risen for several consecutive months, the overall valuation remains low, and the long-term cost-effectiveness of allocation is still high. With the continuous development of the AI industry trend and the backdrop of the Federal Reserve's interest rate cut cycle, the Hong Kong stock market may continue to fluctuate upward in the future. In terms of industry allocation, focus on TMT and advanced manufacturing sectors in the medium term, and if the market experiences fluctuations, pay attention to sectors with stagnant growth, such as high-dividend and consumer sectors.

Everbright Securities' main viewpoints are as follows:

October A-share and Hong Kong stock market performed fluctuating

Major A-share indices showed mixed performance in October. Affected by fluctuations in overseas expectations and a decline in market risk appetite, the major A-share indices showed significant differentiation in October (as of the 28th), with the Shanghai Composite Index having the largest increase, rising 2.7% cumulatively in October, while the STAR 50 had the largest decline, falling 1.6% cumulatively. The increase in various industries in October was quite differentiated. Affected by a decline in market sentiment and some funds taking profits, industries such as coal, telecommunications, and banking performed relatively well.

The Hong Kong stock market experienced some adjustments in October. In October, due to increased overseas uncertainty and a decline in domestic risk appetite, the overall trend of the Hong Kong stock market was relatively volatile. As of October 28, 2025, the increases of the Hang Seng Hong Kong 35, Hang Seng China Enterprises Index, Hang Seng Index, Hang Seng Composite Index, and Hang Seng TECH Index were 0.2%, -1.9%, -1.9%, -2.3%, and -5.8%, respectively.

A-share viewpoint: The market may continue to perform strongly

The market is expected to maintain strong performance. On one hand, the 20th National Congress of the Communist Party of China reviewed and approved the "Suggestions of the Central Committee of the Communist Party of China on Formulating the 15th Five-Year Plan for National Economic and Social Development," proposing the main goals for economic and social development during the "15th Five-Year Plan" period, and the new round of policy deployment is expected to boost market confidence. On the other hand, a new round of China-U.S. economic and trade consultations is being held in Malaysia, coupled with the expectation that the Federal Reserve will continue to cut interest rates in October, which may raise market risk appetite. Overall, multiple favorable factors are expected to support the market's strong performance in the short term.

In terms of industry allocation, focus on TMT and advanced manufacturing sectors in the medium term, and if the market experiences fluctuations, pay attention to stagnant growth sectors, such as high-dividend and consumer sectors. Under the liquidity-driven market, TMT is more likely to become the main line in the mid-term, and this round may be the same. If the market shifts to a fundamental-driven approach, considering that the current market may be in the mid-term, advanced manufacturing is worth paying close attention to. If the market experiences fluctuations, focus on stagnant growth sectors, such as high-dividend and consumer sectors, including banking, public utilities, food and beverage, and beauty care industries.

Hong Kong stock viewpoint: Focus on "dumbbell" type allocation

With the Federal Reserve's interest rate cut cycle beginning, the Hong Kong stock market may continue to fluctuate upward in the future. The overall profitability of the Hong Kong stock market is relatively strong, while assets such as the internet, new consumption, and innovative drugs are relatively scarce. In addition, although the Hong Kong stock market has risen for several consecutive months, the overall valuation remains low, and the long-term cost-effectiveness of allocation is still high. With the continuous development of the AI industry trend and the backdrop of the Federal Reserve's interest rate cut cycle, the Hong Kong stock market may continue to fluctuate upward in the future Focus on the "barbell" strategy that emphasizes technology growth and high dividend yields. 1) Pay attention to concepts related to self-controllability, chips, and high-end manufacturing that are likely to continue receiving domestic support policies under the backdrop of the China-U.S. great game. 2) Focus on certain internet technology companies with independent prosperity. 3) Continue to pay attention to high dividend low volatility strategies, including industries such as telecommunications, utilities, and banking. The high dividend strategy can still serve as a stable income base.

Risk Warning

Policy implementation may fall short of expectations; significant deterioration in China-U.S. relations; occurrence of unexpected risk events