Business Strategy: Improvement in liquidity supports the rebound of Hong Kong stocks, focusing on opportunities in innovative pharmaceuticals and the internet sector.

The research report released by China Merchants Strategy on marketing strategies pointed out that after the rapid rise of Hibor interest rates recently stabilized gradually, and Powell's stance has significantly turned dovish. The changes in internal and external liquidity both point to one conclusion: the narrative of tightening liquidity in the Hong Kong stock market has been marginally improved. China Merchants Strategy believes that the improvement in liquidity narrative is enough to support the short-term rebound of Hong Kong stocks, narrowing the gap with the recent rapid rise in A-shares. In terms of performance, the current earnings pre-announcement rate of Hong Kong stocks is at a new high since 2022. However, in the previous bull markets, the Hong Kong stock index slightly lagged behind A-shares, so in this round of allocation, it is recommended to focus on directions that are differentiated from A-shares. In terms of pace, it is recommended to start with innovative drugs, then internet, and lastly new consumption.