Hong Kong's benchmark index continues to hover around the 25,000-point mark. Ying Yan Zhao, senior investment strategist at Amundi Private Wealth, notes that after a 2,000 to 3,000-point rally, a lack of fresh catalysts following the earnings season, combined with ongoing US-Iran geopolitical tensions, makes the current market pullback a natural development. She views this as a healthy correction phase for Hong Kong equities, predicting the downside will likely remain limited. The upcoming Sino-US talks in mid-September will be a key focus for market direction.

Zhao observed that earnings from Chinese tech companies broadly met expectations. While revenue figures were somewhat soft, profit delivery showed no major discrepancies. Heavy AI capital expenditure is putting pressure on margins and free cash flow; however, Chinese firms are deploying AI investment more methodically than their US counterparts. Their ability to procure more domestic chips offers better cost efficiency, and with the sector's valuations remaining relatively low, this could strengthen the case for foreign capital rotating back into Chinese tech names.

She also pointed out that DeepSeek's recent price increase reflects greater pricing flexibility for Chinese AI models, which could enhance the profitability of tech companies. Nevertheless, even though AI serves as a growth engine for the next two to three years, its contribution to overall corporate earnings remains limited. In terms of allocation, Zhao anticipates capital rotation, with investors shifting focus back to high-dividend stocks. She favors Hong Kong local conglomerates, REITs, and financial shares. Regarding insurance stocks, which have recently come under pressure due to mainland tax proposals on offshore policy gains, she suggests buying on dips, as the yield differential between mainland China and Hong Kong investments still favors the latter.