According to a report from Zhitong Finance APP, Ding Meng, Chief Economist at China CITIC Bank (International), pointed out that the gap between U.S. CPI and PPI reflects persistently rising local costs, suggesting the Federal Reserve will still need to make vigorous efforts to control inflation. Global monetary policy is leaning toward tightening, and as many as three rate hikes may be needed by 2027. He expects that surging bond yields will become the biggest headwind for financial markets.

Zhang Haoen, Head of Personal and Business Banking Investment at the bank, believes that Hang Seng Index valuations are already at a level below the historical average, and combined with the latest Hang Seng Tech Index reforms, a rebound in the Hang Seng Index cannot be ruled out. He forecasts a year-end target of 27,000 points for the Hang Seng Index, slightly lowered from the earlier 28,000 points.

Zhang Haoen suggests that investors can accumulate undervalued leading stocks, while allocating another portion to high-dividend sectors with stable cash flows. However, he emphasizes that in a high-interest-rate environment, investors should remain cautious when selecting stocks, and it is advisable to diversify funds across quality assets in different regions globally to balance risks and more rigorously control overall portfolio volatility.

Regarding U.S. equities, Zhang Haoen expects that the high-interest-rate environment may put pressure on U.S. equity valuations for a re-rating. However, historical data shows that U.S. equities tend to perform better in the fourth quarter than in other quarters, especially after U.S. midterm elections become clearer, when stock market performance is relatively ideal. Additionally, the current price-to-earnings ratio of the S&P 500 Index at approximately 19 times is also reasonable. Therefore, the bank has upgraded U.S. equities from a "standard allocation" rating in the third quarter to a "mild overweight."