[True Insight Institutional View] Sticky Inflation + Hawkish Signals, Hong Kong Stocks Expected to Maintain High-Level Volatility

Affected by the higher-than-expected February PPI (3.4%) and rising core PPI, U.S. inflation pressure remains challenging. The Federal Reserve kept interest rates unchanged, with the latest dot plot sending a strong hawkish signal: the median interest rate for 2026 remains at 3.4%, implying only one rate cut for the entire year; moreover, as many as 14 out of 19 officials expect only one rate cut or none, and the long-term interest rate forecast was further raised to 3.1%. Powell clearly stated he is "in no hurry to cut rates," pushing market expectations for the first rate cut to the end of the year. Rising U.S. Treasury yields and a stronger dollar are significantly pressuring gold and high-valuation tech stocks. In the short term, the broader market is expected to maintain high-level volatility under the dual pressure of "higher for longer" interest rate expectations and the Middle East situation, and operations should tend to be conservative.

Southbound Stock Connect recorded a net inflow of 1.217 billion yuan on Wednesday. Among them, $BABA-W(09988.HK) saw the largest inflow, reaching 1.536 billion HKD; followed by Xiaomi Group W (01810.HK).$SMIC(00981.HK) recorded the largest net outflow, at 774 million HKD; followed by Tencent Holdings (00700.HK).

Source: KGI Securities