The Zhitong Finance App learned that China CITIC Bank (International) released its economic and investment outlook for the third quarter of 2026. The report points out that Hong Kong stocks already have a basis for a rebound at the valuation level, but the subsequent trend still depends on the strength of the introduction of mainland macroeconomic policies and signs of a reversal in foreign capital flows. In terms of allocation, the bank suggests that valuable stocks with high dividends and abundant free cash flow can be deployed as defense; or technology stocks and high-end manufacturing leaders with fully adjusted valuations in line with China's “autonomous and controllable” strategy to seize policy catalytic opportunities.
Zhang Ho-en, head of investment in the bank's personal and commercial banking business, said that the long-term theme of artificial intelligence (AI) is still the core of the market, but AI and semiconductor-related stocks, which had significant gains in the previous period, have retreated at a high level. Some of the capital flows to value stocks and relatively backward but catalytic sectors, including finance and healthcare.
Zhang Hao-en pointed out that looking ahead to the third quarter, investors should focus on core risks such as corporate capital expenditure sustainability, inflation stickiness, and interest rate forecasts. They can moderately increase defensive, high-dividend, or thematic value sectors to avoid excessive concentration on a single AI concept stock to reduce the overall volatility of the investment portfolio.
The bank's chief economist, Ding Meng, said that the situation in the Middle East is still one of the focus of market attention. Federal Reserve Chairman Walsh's monetary policy stance is more hawkish than previously anticipated. The probability that the US will raise interest rates next year will increase, which will affect global capital costs and risk appetite. Against the backdrop of a possible 2027 interest rate hike in the US and a correction in the stock market, the bank expects Hong Kong housing prices to rise by about 5% in the second half of 2026, and property prices are expected to increase by about 5% for the whole year.