EB Securities International has outlined three key investment themes for asset allocation in the second half of the year: focusing on the Chinese mainland and Hong Kong stock markets, the U.S. artificial intelligence sector, and high-grade bonds. Based on fundamental analysis, valuations have reached a reasonable range following the adjustments in the first half. Coupled with the solid performance of the Chinese economy, the markets are expected to have room for a rebound in the latter half as policy dividends continue to be released. The firm has set a target of 28,000 points for the Hang Seng Index, with targets of 6,000 points for the Hang Seng TECH Index and 4,500 points for the Shanghai Composite Index.

The first half of the year saw global markets seeking equilibrium amidst complex political and economic landscapes, with attention focused on the U.S. Federal Reserve's cautious pace of interest rate cuts, geopolitical impacts on supply chains, and the progress of artificial intelligence (AI) transitioning from concept to tangible profitability. Looking ahead to the second half, markets are at a critical juncture. If expectations for U.S. rate cuts continue to diminish, assets with solid fundamentals and defensive characteristics are likely to stand out.

The firm's securities strategist noted that the Hong Kong stock market's major rebound trend, which began in January 2024, continued into the first half. While geopolitical factors influenced the path of this rally, they did not alter the overall trend. Following recent declines, the Hang Seng Index's forward price-to-earnings ratio has once again fallen to a level just slightly above its five-year average. Supported by the positive fundamental backdrop of the mainland economy, Hong Kong stocks are poised to resume a valuation recovery trend. Concurrently, strong performance in overseas markets and the potential for mainland Chinese stocks to reach new highs in the second half are expected to drive a recovery in the Hong Kong market.

In the first half, the four sectors recommended by EB Securities International—mainland Chinese financials, smart technology, energy & metals, and local Hong Kong financials—performed exceptionally well, delivering an average cumulative maximum return exceeding 30%, significantly outperforming the broader market. For the second half, while these sectors may continue to warrant appropriate attention, investors are also advised to focus on four new sectors: artificial intelligence, innovative pharmaceuticals, power equipment, and domestic consumption. The AI and innovative pharmaceutical sectors are benefiting from the explosive growth phase of AI applications and favorable progress in overseas expansion, respectively. Meanwhile, the power equipment and domestic consumption sectors are being driven by accelerated energy transition and recovering consumer confidence.

The firm's global markets and foreign exchange strategist pointed out that, given expectations for the Fed to remain cautious about cutting rates in the second half, investors should prioritize portfolio resilience. Regarding the Chinese yuan, the firm maintains a neutral-to-positive outlook. As China's economic structure optimizes, confidence in the yuan's role in international trade and reserves is gradually strengthening. Looking forward, the yuan is expected to maintain its resilience amidst changes, with the offshore yuan potentially returning to a level around 6.7 against the U.S. dollar in the second half of the year.