Guosen Securities released a research report stating that following the Federal Reserve's interest rate cut in December, market expectations now point to the next rate cut being delayed until late April. In overseas markets, the Venezuela incident has temporarily heightened geopolitical uncertainty, although its medium-term impact on oil prices still requires monitoring of subsequent developments. Regarding the Hong Kong stock market, the firm is optimistic about a dual-driven rally in the first half of 2026, fueled by a weakening US dollar index prompting overseas capital inflows and a seasonal improvement in domestic liquidity during the spring. Within this context, the AI sector remains the top priority for 2026, driven by both the need for accelerated semiconductor hardware localization under the 15th Five-Year Plan and expectations for more AI applications to materialize, primarily concentrated in the Hang Seng Tech and Hang Seng Internet sectors. The main views of Guosen Securities are as follows:
The United States: Inflationary pressures are easing, with subsequent focus shifting more towards employment. After the December rate cut, market expectations have pushed the next potential cut to late April. The government shutdown significantly compromised the quality of numerous economic data releases, necessitating more information to objectively reveal the current economic situation. A sluggish real estate market coupled with relative weakness in the job market suggests controllable inflationary pressure in the near term, making employment data the key metric to watch. The Venezuela incident has added short-term geopolitical uncertainty, but its medium-term effect on oil prices remains contingent on future developments.
Domestically: Focus on the AI and PPI directions. Entering 2026, two main themes are likely to alter market expectations: the release of the 15th Five-Year Plan during the Two Sessions, and the sustained improvement in the Producer Price Index (PPI). The former revolves around growth expectations for the next five years, along with more concrete and quantifiable market capacity and growth rates; the latter concerns corporate profitability and business sentiment, an area inevitably scrutinized by institutional capital.
Hong Kong Stocks: The recovery rally has already begun. The firm is optimistic about a dual-driven market performance in the first half of 2026, propelled by overseas capital returning due to a weaker US dollar index and improved domestic liquidity conditions in the spring. It is recommended to focus on the dual themes of AI and PPI. Regarding specific sectors: AI Sector: AI remains the paramount focus for 2026, supported by the push for semiconductor hardware localization under the 15th Five-Year Plan and anticipation for more AI application deployments, largely concentrated in the Hang Seng Tech and Hang Seng Internet indexes. Raw Materials & Industrials: Anti-internal competition ("anti-involution") policies in 2026 will support a recovery in corporate profits; upstream metals and certain mid-to-upstream industrial enterprises are poised to benefit continuously. Furthermore, a weakening US dollar index, as anticipated, would also be favorable for commodity prices in 2026. Non-Bank Financials: Earnings for non-bank financial institutions have seen significant upward revisions recently; with market stabilization and an upward trend, both insurance and securities sectors stand to benefit. Innovative Pharmaceuticals: The innovative drug sector maintains stable performance and is worthy of continued holding; any future announcements of new Business Development (BD) projects could provide additional room for sector recovery. Consumer Sector: Valuations in certain areas, such as trendy toys, have fallen to around 15 times 2026 earnings, and the state is expected to continue rolling out new rounds of consumption subsidies in 2026. The sector is oversold, with valuations at the 0th percentile compared to the past decade, indicating a need for recovery.
Risk warnings include uncertainties surrounding geopolitics, US tariff policies, the extent of overseas interest rate cuts, and competitive dynamics within certain industries.
