The market is closely watching the China-US trade negotiations and the upcoming leaders' summit this week. EB SECURITIES' international strategist Wu Lixian noted that the outcome of the meeting will significantly influence market sentiment. He expects the Hang Seng Index (HSI) to find strong support at the 25,200 level, with potential to surpass this year's highs if positive developments continue.

Wu highlighted that current uncertainties are restraining market direction, leading to cautious sentiment and subdued trading volumes. Once the negotiation results are clear, the market is likely to establish a definitive trend, which will be pivotal for Hong Kong stocks in November.

Under a baseline scenario, Wu anticipates a partial agreement between the two nations, though resolving all disputes will take time. He reiterated that the HSI has solid support at 25,200, and sustained positive news could push it to new annual highs.

Regarding U.S. policy, Wu pointed out that the Federal Reserve is now in a rate-cutting cycle, unlike April when tariff hikes impacted dollar-denominated assets. He doubts further aggressive tariffs, as they could exacerbate domestic inflation.

While the Fed’s upcoming rate decision is widely expected to include a cut, Wu believes it is already priced in. Even if Hong Kong follows suit, the impact on local equities may be limited—HSI movements will hinge more on trade talks than monetary policy.

Sector-wise, Wu recommends high-dividend stocks, particularly growth-oriented Chinese telecoms and oil stocks favored by mainland investors. For tech investors, he advises waiting for trade clarity before entering the market.