Fed Interest Rate Expectations and Geopolitical Tensions Shake Hong Kong Stock Market

The Hong Kong stock market landscape is currently facing significant double pressure. On one hand, market expectations regarding the possibility of a Federal Reserve interest rate cut have shifted to a more conservative stance compared to previous forecasts. On the other hand, escalating global geopolitical risks continue to create uncertainty that hampers investor sentiment. According to Galaxy Securities’ analysis, the combination of these two factors will trigger sustained volatility in this regional market.

Double Risk Factors Drive Market Volatility

The shift in expectations regarding Federal Reserve monetary policy has become a key catalyst for market movements. As investors adjust their projections of the interest rate trajectory, capital flows and asset valuations are prone to corrections. Simultaneously, unpredictable geopolitical tensions create a more cautious investment environment. These two dynamics together increase volatility in the Hong Kong equity market, posing significant challenges for traditional investment strategies.

Technology Sector: Long-Term Opportunities Amid Uncertainty

Despite facing short-term headwinds, the technology sector continues to maintain fundamental investment appeal. Several structural trends provide ongoing support, including rising prices in global supply chains that create incentives for domestic substitution, as well as the acceleration of artificial intelligence adoption across various industries. These factors are expected to drive the long-term performance of the technology sector, making it a relevant investment choice for investors with a longer time horizon.

Energy, Precious Metals, and Consumer Sectors: Differentiation Strategies Amid Expectations of Change

The energy and precious metals sectors show high sensitivity to geopolitical dynamics, so price fluctuations in these sectors will likely remain characteristic of the market in the coming period. Investors’ expectations need to adjust for potential volatility in these areas. Conversely, the consumer sector offers different opportunities. Currently, valuations in the consumer sector are among the lowest in the analyzed period. As the Lunar New Year approaches, various stimulus policies to boost consumer spending are expected to be activated, creating a catalyst for the sector’s recovery in the near future. The right investment strategy is to identify the optimal moments to shift exposure from less promising sectors to areas with stronger recovery momentum.