Huatai Securities Hong Kong Stock Strategy: Responding to High Volatility Environment with Balance Rather than Rotation

Huatai Securities released a strategy for Hong Kong stocks, stating that various styles have returned to the same starting line, with accelerated rotation making balanced allocation the optimal solution. Since the end of July, global markets have experienced a balance between old and new economies, as well as between hardware and software. However, it has been observed that no sector has emerged as a strong leader in this round of rebalancing, making short-term gains difficult to capture amidst rapid rotations, leading to a more dispersed investment orientation. After the challenges of stop-loss in a highly concentrated pullback, the current market is not embracing a single main theme again, but rather selecting leading companies with strong profitability from various industries. For Hong Kong stocks, with the external environment stabilizing and dividend yields declining, the fastest phase of capital inflow may be coming to an end, but it can still play a role in risk diversification and balance. Therefore, first, a strong foundation of dividends remains important, and second, the significance of stock selection is increasing. Suggested allocations: hold low-volatility dividends; pay attention to dairy products and certain retail sectors with confirmed operational bottoms; and prioritize offensive categories like the AI supply chain, such as wafer foundries, rather than focusing solely on foundational holdings.