The Hong Kong Strategy Review: Haitong International's 'Cold Wind in Summer' warning materialized, with global stock markets plunging in July; 'Sowing Autumn' judged that the AI bull market has entered its 'autumn,' expected to last several quarters; last week, the Nasdaq hit a new high, and the Philadelphia Semiconductor Index surged 6.3%, with the AI rally's main theme shifting from AI infrastructure to AI applications.
Market Outlook – Global stock markets may shift from risk-off to risk-on in October, with US equities maintaining strength and Asia-Pacific markets likely exhibiting a 'US market spillover.'
First, improved risk appetite in global stock markets in the fourth quarter is worth expecting. The Chinese and US heads of state held talks and reached eight-point consensus: agreeing to build a 'constructive strategic stability relationship between China and the US based on respect, fairness, and reciprocity'; agreeing to establish a China-US Super Intelligence (SI) dialogue mechanism; planning to grant more favorable tariff treatment on USD 30 billion of non-sensitive goods in both directions, reducing market concerns over uncontrolled tech friction and volatile trade policies. Looking ahead, the Middle East situation may ease temporarily in the fourth quarter, pushing energy prices and inflation expectations lower.
Second, liquidity: The 10-year US Treasury yield has already been sufficiently priced in this year and is likely to fluctuate downward in October. Progress has emerged in US-Iran talks, with both sides discussing phased arrangements to reopen the Strait of Hormuz; the US hopes China will increase refined oil production, and restrictions on Chinese refined oil exports may be relaxed, alleviating global refined oil supply tightness. The market has currently priced in about three 25bps rate hikes over the next 12 months, making a fluctuating decline in the fourth quarter highly probable.
(Three) Investment Strategy: Quietly enjoy the 'autumn' of the AI rally, selectively pick 'truly high-growth' technology stocks in China and the US, and seek non-tech sectors with 'better-than-expected prosperity.'
Focus on the natural growth rate of listed companies' medium- to long-term earnings growth to hedge against macro risks. The market's pricing of the long-term sustainable growth ceiling for companies remains severely inadequate, which is precisely where the big opportunity in the 'autumn' of the AI rally lies. Considering the potential decline in long-term US Treasury yields and oil prices in October, the global technology rally may replay an AI bull market 'autumn' similar to the internet rally of 1999–2000, where AI industry growth and valuation recovery resonate.
Theme One: Select global technology leaders to capture opportunities in computing power construction and inference application diffusion. Chinese technology should balance self-reliance and control with global industrial demand, focusing on companies with strong commercialization capabilities. AI applications will see prosperity with China-US synergy: the importance of cybersecurity, model governance, and private deployment will continue to rise; pay attention to AI application opportunities in biomedicine, embodied intelligence, and other fields. On the AI hardware side, focus on long-term opportunities in domestic computing power, semiconductor equipment, and advanced packaging; in the medium to short term, selectively pick leaders in memory and optical-related fields with high technological barriers and strong execution capabilities.
Theme Two: Capture the spillover rally in non-AI technology sectors. First, AI infrastructure will continue underpinned by AI applications, making sectors such as non-ferrous metals, power equipment and energy storage, chemicals, gold, and digital assets worth watching. Second, explore opportunities for 'old trees blooming anew' among local state-owned enterprises, focusing on merger & acquisition, restructuring, and asset injection-driven external growth. Third, Chinese refining leaders with large-scale refining capacity and refined oil export capabilities may see short-term improvement in prosperity, creating trading opportunities.
Haitong International Research Department Head and Chief Economist Zhang Yidong
*Articles signed and/or unsigned published in 'Economic Link' represent the authors' personal opinions and do not reflect the position of 'Economic Link,' which serves solely as a platform for free expression.
Market Outlook – Global stock markets may shift from risk-off to risk-on in October, with US equities maintaining strength and Asia-Pacific markets likely exhibiting a 'US market spillover.'
First, improved risk appetite in global stock markets in the fourth quarter is worth expecting. The Chinese and US heads of state held talks and reached eight-point consensus: agreeing to build a 'constructive strategic stability relationship between China and the US based on respect, fairness, and reciprocity'; agreeing to establish a China-US Super Intelligence (SI) dialogue mechanism; planning to grant more favorable tariff treatment on USD 30 billion of non-sensitive goods in both directions, reducing market concerns over uncontrolled tech friction and volatile trade policies. Looking ahead, the Middle East situation may ease temporarily in the fourth quarter, pushing energy prices and inflation expectations lower.
Second, liquidity: The 10-year US Treasury yield has already been sufficiently priced in this year and is likely to fluctuate downward in October. Progress has emerged in US-Iran talks, with both sides discussing phased arrangements to reopen the Strait of Hormuz; the US hopes China will increase refined oil production, and restrictions on Chinese refined oil exports may be relaxed, alleviating global refined oil supply tightness. The market has currently priced in about three 25bps rate hikes over the next 12 months, making a fluctuating decline in the fourth quarter highly probable.
(Three) Investment Strategy: Quietly enjoy the 'autumn' of the AI rally, selectively pick 'truly high-growth' technology stocks in China and the US, and seek non-tech sectors with 'better-than-expected prosperity.'
Focus on the natural growth rate of listed companies' medium- to long-term earnings growth to hedge against macro risks. The market's pricing of the long-term sustainable growth ceiling for companies remains severely inadequate, which is precisely where the big opportunity in the 'autumn' of the AI rally lies. Considering the potential decline in long-term US Treasury yields and oil prices in October, the global technology rally may replay an AI bull market 'autumn' similar to the internet rally of 1999–2000, where AI industry growth and valuation recovery resonate.
Theme One: Select global technology leaders to capture opportunities in computing power construction and inference application diffusion. Chinese technology should balance self-reliance and control with global industrial demand, focusing on companies with strong commercialization capabilities. AI applications will see prosperity with China-US synergy: the importance of cybersecurity, model governance, and private deployment will continue to rise; pay attention to AI application opportunities in biomedicine, embodied intelligence, and other fields. On the AI hardware side, focus on long-term opportunities in domestic computing power, semiconductor equipment, and advanced packaging; in the medium to short term, selectively pick leaders in memory and optical-related fields with high technological barriers and strong execution capabilities.
Theme Two: Capture the spillover rally in non-AI technology sectors. First, AI infrastructure will continue underpinned by AI applications, making sectors such as non-ferrous metals, power equipment and energy storage, chemicals, gold, and digital assets worth watching. Second, explore opportunities for 'old trees blooming anew' among local state-owned enterprises, focusing on merger & acquisition, restructuring, and asset injection-driven external growth. Third, Chinese refining leaders with large-scale refining capacity and refined oil export capabilities may see short-term improvement in prosperity, creating trading opportunities.
Haitong International Research Department Head and Chief Economist Zhang Yidong
*Articles signed and/or unsigned published in 'Economic Link' represent the authors' personal opinions and do not reflect the position of 'Economic Link,' which serves solely as a platform for free expression.
