Before the arrival of October, the overseas Chinese stock market continued its downward trend, falling for the fifth week in a row. The sharp rise in interest rates on US bonds over the past 10 years and the sharp appreciation of the dollar have triggered volatility in asset prices around the world, including the weakening of the renminbi. The renminbi broke through a new low of 7.2 against the dollar in 2019 in mid-week, affecting investors' risk appetite and capital flows.

In this environment, the Hong Kong stock market is generally more vulnerable to external market fluctuations and the devaluation of the renminbi.As a result, the Hang Seng Index fell last week to its lowest level since 2011, while the Hang Seng China Enterprises Index fell to its lowest level since 2008. However, it is worth mentioning that the amount of Hong Kong share buybacks reached 17.6 billion Hong Kong dollars in September, a new monthly record. Historically,The sharp increase in the size of share buybacks is usually a relatively reliable basis for the market to hit bottom in the medium term.

External fluctuations and tighter global financial conditions remain the main headwinds facing the overseas Chinese stock market last week.The dollar and 10-year Treasury rates rose sharply again after the Fed's hawkish policy stance was conveyed at the FOMC's September meeting a week earlier. External uncertainties such as worries about the global recession and the escalation of the geopolitical situation in Europe may still be the main sources of volatility facing the overseas Chinese stock market throughout the fourth quarter.

On the domestic side, recent economic data still show the need for further stable growth policies to support.But there was no shortage of good news last week, including a number of important policies to promote the repair of the sluggish real estate market. We believe that these policy measures show the government's willingness and signals to stabilize growth and contribute to the gradual bottoming out or even moderate stabilization of the real estate market. In addition, with the announcement by the Hong Kong SAR a week ago that there is no need for mandatory hotel quarantine, we expect the sharp increase in the number of visitors to Hong Kong is also expected to boost the recovery of Hong Kong's tourism and consumer industries.

look forward,As mainland Chinese investors usher in the National Day holiday this week, we expect that market trading may be relatively light, and investors may wait for the meeting and seek clearer policy signals.So the market is likely to be in a continuous consolidation in the coming weeks.At the current level, the upside of the market is greater than the downside risk. Before that, high dividend yield stocks denominated in Hong Kong dollars may be a better choice for investors, providing downside protection and hedging against the negative impact of RMB depreciation.

In addition, we believe that high-quality growth stocks (such as sectors or targets where growth remains high or there is a possibility of earnings reversal) may still be a good choice.