--- title: "China Merchants Securities: There is room for upward revision in external liquidity expectations; it is recommended to return to a barbell strategy in allocation" type: "News" locale: "en" url: "https://longbridge.com/en/news/265404078.md" description: "CITIC Securities released a research report indicating that the Hong Kong stock market has been volatile recently, with external liquidity expectations having room for upward revision. The market is expected to rise after consolidation. It is recommended to return to a barbell strategy, increasing positions in technology (AI chain) and non-ferrous metals on the offensive side, while focusing on dividends and turnaround situations on the defensive side. The triple resonance of fundamentals, policies, and liquidity will support a rebound in the undervalued Hong Kong stock market. The Federal Reserve's interest rate cuts and continuous inflow of foreign capital provide support for the market" datetime: "2025-11-11T22:32:04.000Z" locales: - [zh-CN](https://longbridge.com/zh-CN/news/265404078.md) - [en](https://longbridge.com/en/news/265404078.md) - [zh-HK](https://longbridge.com/zh-HK/news/265404078.md) --- > Supported Languages: [简体中文](https://longbridge.com/zh-CN/news/265404078.md) | [繁體中文](https://longbridge.com/zh-HK/news/265404078.md) # China Merchants Securities: There is room for upward revision in external liquidity expectations; it is recommended to return to a barbell strategy in allocation According to the Zhitong Finance APP, China Merchants Securities released a research report stating that the recent performance of Hong Kong stocks has been volatile. In addition to external fluctuations, some investors are also hoping to secure profits. However, this expectation gap is precisely the investment opportunity for Hong Kong stocks. The U.S. government shutdown is approaching a turning point, and there is upward revision space for external liquidity expectations. It is anticipated that many favorable factors and expectation gaps will gradually be recognized by the market, which is expected to open up upward space after consolidation. In terms of allocation, it is recommended to return to the barbell strategy, increasing positions in technology (AI chain) and non-ferrous metals on the offensive side, while focusing on dividends and turnaround situations on the defensive side. **The main points of China Merchants Securities are as follows:** **Fundamentals and Policies:** The macro economy continues to slow marginally. Although China's macro economy continues to slow marginally, the new economy represented by technology is experiencing strong growth (with a profit growth rate of 31.7% in the semi-annual report), providing strong support for the stock market. On the policy front, there are signs of easing in U.S.-China relations, with the leaders of both countries reaching agreements on multiple areas to pause measures, validating the judgment of "fighting without breaking." After the Fourth Plenary Session, the "14th Five-Year Plan" outline exceeded expectations, and the government will introduce incremental support from multiple dimensions such as technological innovation, expanding domestic demand, and macroeconomic regulation. The central bank has restarted the buying and selling of government bonds, which is conducive to enhancing the effectiveness of monetary policy and boosting confidence. **Liquidity and Valuation:** Foreign capital and southbound funds continue to see net inflows, and the Federal Reserve is expected to cut interest rates as scheduled. The Federal Reserve cut interest rates as expected in October, and it is anticipated that the Fed will continue to cut rates by 25 basis points in December and three more times next year (a total of 75 basis points for the year). At the same time, the Fed will end its balance sheet reduction in December, alleviating liquidity pressure. Overseas funds are expected to further flow into Hong Kong stocks. The momentum of net inflows from southbound funds is positive, and the "market entry potential" of long-term institutional investors and incremental resident funds continues to be released. Overall, the triple resonance of fundamentals, policies, and liquidity, combined with Hong Kong stocks being in a valuation trough, will become the core driving force supporting the rebound of Hong Kong stocks. **Allocation Strategy:** Return to the barbell strategy, offensive (technology/non-ferrous) + bottom positions (turnaround/dividends) **"Offensive" focuses on the AI industry chain and non-ferrous metals.** **AI Industry Chain:** The most resilient growth variety, with promising long-term growth potential; recommended AI-related internet, humanoid robots, autonomous driving, and electricity. **Non-Ferrous Metals:** Short-term adjustments, but still driven by the triple factors of U.S. dollar depreciation, low interest rates, and liquidity. Gold also benefits from global central bank purchases and safe-haven demand due to the loss of U.S. dollar credit; basic metals can focus on related companies such as copper and aluminum. **"Two Bottom Positions" focus on "turnaround" and "dividends."** **"Turnaround" Strategy:** Represented by essential consumption, after four years of difficulties, a supply-demand inflection point is beginning to emerge. However, valuations are still at the historical lowest 30% percentile. Leading companies with competitive advantages can still increase market share and profit margins to achieve alpha growth, coupled with a wide moat, the industry competitive landscape is expected to improve; it is recommended to buy in batches and hold for the long term. **High Dividend Strategy:** The Hang Seng High Dividend Yield Index has a dividend yield of 6%, with stable dividend-paying ability. Driven by the increasing demand for "fixed income +" products from southbound funds, residents' deposits are passively relocating, and the demand for dividend stock allocation remains strong. From the perspective of incremental funds, insurance funds have the largest volume in the Hong Kong Stock Connect and continue to allocate high dividend assets as bottom positions **Risk Warning:** 1) Federal Reserve monetary policy; 2) Significant liquidity fluctuations; 3) Black swan events ### Related Stocks - [GHNM (600301.CN)](https://longbridge.com/en/quote/600301.CN.md) ## Related News & Research - [MedPal AI Wins Strong Shareholder Backing at AGM as It Expands AI Health Platform](https://longbridge.com/en/news/281501359.md) - [06:14 ETYonyou AI Lab Introduces Framework to Make Enterprise AI Decisions Traceable and Auditable](https://longbridge.com/en/news/281504690.md) - [Insig AI Plans Growth Drive and Eyes Nasdaq Dual Listing](https://longbridge.com/en/news/281311983.md) - [Letter from the Editor Introducing AI Intelligence on American Banker](https://longbridge.com/en/news/281266312.md) - [Which Generation Is the Most Bullish About AI Stocks? 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