A Window of Opportunity Emerges for Risk Assets

Amid strong expectations of interest rate cuts by the Federal Reserve and a restructuring of global liquidity, the logic behind major asset allocation is undergoing profound changes. Li Chong noted that different interest rate cut scenarios correspond to vastly different asset performances. Investors must first distinguish between the types of rate cuts: preventive cuts under a soft landing scenario or reactive cuts in a recessionary context.

Li Chong believes that if it is a preventive rate cut under a soft landing scenario, U.S. stocks typically perform well; during the phase where rate cut expectations are building, gold tends to perform better; while the upside for U.S. bonds in a soft landing scenario is relatively limited, global risk assets generally perform well due to favorable liquidity conditions. However, if it is a passive rate cut in a recessionary context, equity risk assets often perform poorly, while safe-haven assets such as U.S. bonds and gold relatively benefit.

Given the current market environment, Li Chong believes this round of rate cuts is more likely to be a preventive measure under a soft landing scenario, meaning risk assets are expected to encounter a favorable allocation window. Whether the A-share and Hong Kong stock markets can seize opportunities depends on the policy guidance accompanying the Fed’s rate cuts. If a "dovish" stance with sustained rate cut guidance is maintained, the market outlook is relatively optimistic. However, if unexpected "hawkish" signals emerge, such as暗示 only one rate cut followed by a pause, risks need to be警惕.

From an investor’s perspective, Li Chong recommends adopting a dynamic allocation strategy. Under soft landing expectations, global risk assets are a key focus, especially emerging markets benefiting from improved liquidity and fundamentals. For instance, interest-rate-sensitive sectors in Hong Kong and A-shares are expected to deliver stronger performance, driven by lower financing costs and technological innovation.

With strong expectations of Fed rate cuts, the landscape of global capital flows and asset pricing logic is being reshaped. In this process, the A-share and Hong Kong stock markets, with their improving fundamentals, lower valuations, and active policy support, are poised to become important allocation directions for global capital.