To The Moon

2024 Review: US Stock Market: Technology stocks, particularly in the AI sector, drove the market higher. The S&P 500 has realised returns in excess of 25% for two consecutive years. Whilst rare, since the start of 2024, this trend indicates a shift from conceptual speculation to profit realisation in AI investments, with the market becoming more stringent in discerning the companies that truly benefit. Hong Kong and China-A (onshore) shares: Financial sectors and High-yielding dividend stocks performed well. Indices like MSCI China Financials Index and FTSE China 50 Index outperformed US benchmarks like the Nasdaq and S&P 500, reflecting the supportive role of policies in driving stable economic growth. 2025 Outlook: US Stock Market: As AI technology advances into specialised verticals, traditional business models may face disruption, while simultaneously creating significant opportunities for innovation. In the short term, the combined pressures of high valuations coupled with declining earnings expectations could lead to potential adjustment risks. Hong Kong and China-A (onshore) shares：China Central Bank's economic policies have emphasised "stabilizing the real estate and stock markets"; with counter-cyclical fiscal and monetary measures expected to continue. Consumption and technology sectors are key areas of support, and valuation recovery in high-yielding dividend stocks remain attractive. Potential Investment Strategy Global Core Principles: Structural opportunities driven by technological revolution and policy support. The U.S. stock market focuses on the diffusion effect of technological breakthroughs; Hong Kong and China-A (onshore) share markets benefit from policies aimed at stabilising the economy and boosting domestic demand. The 3 main pillars driving market change 1\Policy support drives China: Policies focus on "boosting consumption and improving investment efficiency," including specific measures such as subsidies for home appliance consumption and digital transformation upgrades. It emphasises "stabilising the real estate and stock markets," marking the elevation of the capital market's importance to unprecedented new heights United States: Investments in the AI industry have entered deeper waters, with increasing risks of traditional business models being disrupted. The uncertainty surrounding tax cuts and regulatory policies is affecting corporate earnings expectations. 2\Market Sentiment and Industry Dynamics AI investments have transitioned from being conceptual speculations to a period of profit realisation, prompting the market to reprice the business models and competitive moats of technology companies. AI investments have transitioned from being conceptual speculations to a period of profit realisation, prompting the market to reprice the business models and competitive moats of technology companies. High-dividend sectors remain attractive due to low valuations and high returns, likely to serve as a safe haven for capital in 2025. 3\Uncertainties and Potential Risks Macroeconomics: Expectations of slowing global economic growth and the tug-of-war between U.S. and Chinese monetary policies create market disturbances. Geopolitics: While the possibility of de-escalation in the Russia-Ukraine conflict increases, changes in the U.S. and Japan's economic policies present potential risks. Investment & Allocation Strategy insights Differentiated allocations for Aggressive and Conservative Investors U.S. Stock Market Aggressive Investors Strategic Focus:Transition of AI technology from basic R&D to vertical applications. Focus on companies that bring significant operational efficiency improvements, such as multimodal AI and AI Agents. Notable pointers: Strong competitive moats (high R&D investment, rich patent reserves), business models with quick profitability. Main factors: Adjust positions flexibly, monitor changes in potential profit expectations, and avoid traditional industry leaders that could be disrupted. Conservative Investors Strategic Focus:Diversify risk and increase U.S. Treasury bond allocation. Even with potential rate cuts from the Federal Reserve, U.S. Treasury yields remain high and attractive. Notable pointers: Potential Long-term stable returns, focusing on high-rated bonds and short-duration bonds. Main factors: Adjust positions flexibly, monitor interest rate changes, diversify investments, and ensure potential returns while mitigating risks. Hong Kong and China A-Share (Onshore) Market Aggressive Investors Strategic Focus: Key sectors supported by industrial upgrades and policies (technology, consumer). Sectors such as home appliance updates, AI chips, and medical devices. Notable points: Companies with policy support and clear industry demand, focusing on reasonably valued companies with potentially high growth certainty. Main factors: Lean towards growth sectors to capitalise on optimistic market sentiments and shift towards dividend yielding stocks moderately during market downturns. Conservative Investors Strategic Focus: High-yielding dividend stocks and bond assets. Notable pointers: Chinese companies expanding overseas, probably those with advanced technology, established brands, and valuable intellectual property, targeting markets outside of the U.S Main factors: Focus on potential stable returns, and gradually allocate to high-quality technology stocks during market downturns. Future Uncertainties and Response Strategies U.S. and Japan Monetary Policy Directions Impact: U.S. rate cuts pace and Japan’s potential rate hikes could significantly affect global liquidity and risk asset prices. Insight: Monitor the risk of unwinding carry trades involving the yen and reduce holdings in high-volatility assets when necessary. Geopolitical and Economic Environment Impact: The U.S.-Russia-Ukraine geopolitical conflict is easing, but fiscal policy changes and economic slowdown remain as key challenges. Insight: Reduce dependency on single markets and increase allocation diversification. AI Industry Disruption Effects Impact: Traditional business models may quickly be eliminated by AI technologies. Insight: Actively embrace technological innovations while avoiding sectors negatively impacted by AI advancements. Other Asset Allocations – Providing Diverse Options for Risk Hedging and Value Growth Gold Potential Opportunities Strong hedging value, particularly during periods of increasing economic uncertainty. Acts as a safe-haven asset amidst global geopolitical tensions and inflationary pressures. Potential Risks The Federal Reserve’s interest rate cuts may be nearing their end, limiting further price appreciation. A strengthening U.S. dollar could dampen demand for gold. Strategy Insights Treat gold as an auxiliary allocation within a diversified portfolio. Monitor macroeconomic indicators and central bank policies to adjust exposure appropriately. Mortgage-Backed Securities Potential Opportunities A rate-cutting cycle by the Federal Reserve may support a recovery in the U.S. residential real estate market, increasing the value of related bond products. Stable income generation through coupon payments in a low-rate environment. Potential Risks Slower-than-expected recovery in the housing market due to lingering economic uncertainties. Credit risk associated with lower-quality securities. Strategy Insights Focus on high-quality, low-risk MBS to minimize exposure to defaults. Carefully control position sizes and maintain diversification to mitigate concentration risk. $KraneShares Artificial Intelligence and Technology ETF(AGIX)$ $纳指100ETF(QQQ)$ $北美软件ETF-iShares(IGV)$ $iShares Bitcoin Trust(IBIT)$ Disclaimer: Not financial advice. Investment involves risk. The price of investment instruments can and do fluctuate, and any individual instrument may experience upward or downward movements, and under certain circumstances may even become valueless. Past performance is not a guarantee of future results. 
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