Daiwa: The strength of the US dollar is key, expected to provide support for Chinese stocks before the end of the year

Daiwa released a research report indicating that the weakening of the US dollar has a greater impact on emerging markets and Chinese stocks than the Federal Reserve's interest rate cuts. If the US economy achieves a soft landing, it will be beneficial for emerging market stocks. It is expected that by the end of 2025, liquidity will support emerging markets and the Chinese market. Despite increased market volatility, Daiwa holds an optimistic view on Hong Kong stocks, believing they will benefit more from foreign capital inflows, but remains cautious about a market correction in the fourth quarter of 2025, which may be due to cooling sentiment, economic slowdown, or the resurgence of geopolitical risks