Hang Seng Investment Information: The Federal Reserve will cut interest rates by 25 basis points again this year and will reduce rates three times next year

Hang Seng Investment's Chief Investment Officer, Su Haocheng, expects that the Federal Reserve will cut interest rates once by 25 basis points within the year, with a higher likelihood occurring this month, and anticipates three rate cuts next year, totaling 75 basis points.

Li Peishan, Executive Director and CEO of Hang Seng Investment Management, stated that one of the assets benefiting from a rate-cutting environment is gold, with gold prices rising approximately 55% since the beginning of the year, continuously reaching new historical highs. At the same time, demand for gold ETFs continues to grow, with both inflows and total assets under management at near historical highs.

She pointed out that gold ETFs have recorded inflows of about USD 64 billion year-to-date, setting a historical high over the past 20 years, while Asia has maintained a consistent demand for gold ETFs, with inflows of approximately USD 12.4 billion in 2025, accounting for 20% of the global total. The majority of funds for Asian gold ETFs come from China, which alone accounts for 17.5%.

Hang Seng Investment maintains a "neutral" outlook for Hong Kong stocks in the fourth quarter of this year. The southbound funds flowing into Hong Kong stocks have reached a historical high since the beginning of 2025, with an observed increase in demand for high-dividend stocks. As AI becomes localized, it is believed that a self-sufficient artificial intelligence ecosystem is forming. Additionally, the "14th Five-Year Plan" will focus on prioritizing technological self-innovation over the next five years, with expectations that the mainland will deepen the development of emerging industries such as semiconductors, artificial intelligence, and robotics.

Regarding the U.S. stock market, the bank noted that the U.S. stock market has recently reached multiple new highs, benefiting from the support of upward revisions in U.S. corporate earnings and the Federal Reserve's resumption of the rate-cutting cycle. U.S. technology companies' earnings have exceeded expectations, and tariffs do not seem to have had a significant impact on corporate earnings. However, it is believed that current valuations are high; overall, while there are positive signals in the market, considering the elevated valuations and the slight softening of the U.S. job market, short-term volatility may occur, thus maintaining a neutral outlook on the U.S. market