Huatai Securities says persistent global liquidity uncertainty is likely to cap
further valuation recovery for Hong Kong equities; recommends low-volatility,
high-dividend names as core holdings (banks, utilities) and advises limiting
exposure to sectors with high U.S. Treasury-yield beta such as metals. Earnings:
aggregate Hong Kong-listed profit growth in 1H2026 rebounded sharply YoY but is
highly divergent — high-dividend earnings turned positive mainly on
resource-sector strength (sustainability uncertain), innovative drugs sustained
strong growth, while internet profit declines widened. Based on earnings signals
and sensitivity to rate expectations, Huatai favors innovative drugs and CXO
leaders with both earnings realization and market recognition. Staples such as
food & beverage have moved into the latter stage of their fundamental trough but
lack near-term catalysts; recommend patience.
