The US August CPI is about to be released. Huaxing Capital: CPI data may increase market volatility. It is recommended to focus on defensive measures in the US stock market.

According to Dolphin Research APP, the CPI data for August will be released in the United States on Wednesday (September 13th). In response to this, Chen Yalei, Managing Director of the Hong Kong and US Stock Team at Huaxing Capital, and Director of Asian Research, stated that the US economy may have reached a turning point, with the consequences of previous interest rate hikes gradually shifting to the real economy. The volatility and uncertainty caused by this CPI data in the market are higher, and it is recommended to focus on defense in the US stock market at present.

Currently, the market expects that the Federal Reserve will not raise interest rates in September. Chen Yalei pointed out that if the CPI data this time is still high but overall lower than expected, the market may believe that the possibility of the Federal Reserve raising interest rates this month has increased. If the CPI exceeds expectations, the possibility of a soft landing for the US economy will increase, and the Federal Reserve may enter an interest rate cut cycle ahead of schedule, reducing market concerns about economic recession and benefiting the development of the stock market.

Considering that some recent US economic data, including employment, average wages, and consumer confidence index, have shown signs of weakening, Huaxing Capital expects the downward trend of US inflation to continue, but the magnitude of the decline may narrow. It is believed that it will remain above 3% for a period of time.

As for the Hong Kong stock market, Huaxing Capital pointed out that although the central government is gradually releasing stimulus policies, investors remain cautious as indicators of the real economy, such as employment rate, retail growth, and inflation figures, have not yet recovered. There will be a time lag from policy release to reflection in the real economy, and the Hong Kong stock market is currently in this process and is still bottoming out.

Chen Yalei pointed out that in China's current economic recovery cycle, there may be a trend of declining interest rates and gradual repair of CPI, and the consumer goods industry is expected to be the main beneficiary. On the one hand, lower interest rates stimulate consumption, and consumer goods companies have strong pricing power in a moderate inflation environment, thereby increasing profits. On the other hand, the overall valuation of the Chinese consumer goods sector is currently low, and investor sentiment is at a low level. In terms of valuation and fund flows, there is good upward potential in the future.