BOCOM INTL released a research report stating that Hong Kong stocks continued their upward oscillating trend in September, boosted by the dual positive factors of resumed US-China negotiations and overseas rate cut expectations, combined with technology sector rotation gains that provided significant support to the broader market. The external environment continues to improve, with US-China trade negotiations resuming as both sides engage in consultations on key issues including tariff reductions and export controls, warming market expectations for bilateral relationship progress. Due to the National Day and Mid-Autumn Festival holidays, the market is expected to briefly enter a "low season" mode, combined with uncertainties over the US government's short-term funding bill, which may amplify overseas disruptions. Meanwhile, market disagreements persist regarding the timing and magnitude of Federal Reserve rate cuts, with "conditional rate cuts" likely remaining the main theme in the near term, and expectation reversals potentially causing market volatility. BOCOM INTL's main views are as follows: External environment continues marginal improvement, market risk appetite steadily rising. Hong Kong stocks maintained their upward oscillating trend in September, supported by the dual positive factors of resumed US-China negotiations and overseas rate cut expectations, combined with technology sector rotation gains that provided important support to the broader market. The external environment continues to improve, with US-China trade negotiations resuming as both sides engage in consultations on key issues including tariff reductions and export controls, warming market expectations for bilateral relationship progress. At the same time, mainland China's macroeconomic policies maintain continuity and stability, with abundant "growth stabilization" policy tools in reserve, providing fundamental expectation support for Hong Kong stocks. Overseas rate cuts resume, Hong Kong liquidity pressure eases, southbound capital continues accelerated inflow. Hong Kong stock liquidity tightened temporarily in late August, with 1-month HIBOR once approaching levels above 3.9%, but following the Federal Reserve's rate cut implementation, Hong Kong dollar interest rate centers declined from high levels. Southbound capital continued its accelerated inflow trend in September, with net inflows exceeding HK$1.1 trillion for the year, setting a new historical record. Driven by technology narratives, domestic and overseas computing power investments continue to grow, and mainland Chinese investors' allocation demand for quality Hong Kong AI and other targets is expected to remain strong. Focus on Federal Reserve rate cut pace, US-China relationship progress, and mainland China's growth stabilization policy implementation. Due to the National Day and Mid-Autumn Festival holidays, the market is expected to briefly enter a "low season" mode, combined with uncertainties over the US government's short-term funding bill, which may amplify overseas disruptions. Meanwhile, market disagreements persist regarding the timing and magnitude of Federal Reserve rate cuts, with "conditional rate cuts" likely remaining the main theme in the near term, and expectation reversals potentially causing market volatility. Some quality Hong Kong stock sectors' valuations have approached historical highs, with short-term profit-taking pressure remaining, warranting close attention to Federal Reserve rate cut pace, US-China relationship progress, and mainland China's growth stabilization policy developments. Sector allocation continues "high elasticity" + "high dividend" barbell strategy, with moderate adjustments combined with policy catalysts. Technology growth sectors: Under the Federal Reserve's rate-cutting environment, the valuation repair logic for technology stocks is further strengthened, with southbound capital maintaining strong allocation demand for high-growth sectors like Hong Kong technology stocks. AI industry chain related targets benefit from global technology giants' capital expenditure, particularly continued growth in computing power investments. Focus should be placed on core beneficiary targets with independent innovation capabilities such as AI hardware manufacturers and cloud computing service providers, while paying attention to valuation digestion pressure for targets with significant prior gains. Biotechnology and pharmaceutical sector: Under the global rate-cutting environment, biotechnology and pharmaceutical sector valuations are expected to recover. Chinese innovative pharmaceutical companies are accelerating their overseas expansion with increased BD cooperation activity. Focus should be placed on quality targets with global layout and innovative pipelines. High dividend defensive allocation: High dividend yield sectors such as banking, insurance, and utilities show more prominent relative value, serving as portfolio stabilizers and providing continuous dividend income during market volatility.