Henry Investment Management Limited Director and Chief Investment Officer Xue Yonghui said that as the US economy steadily slows down and inflation gradually falls, Federal Reserve Chairman Powell has clearly indicated that the time for policy adjustments has arrived. Unlike in the past when the Fed had to make significant rate cuts due to financial or economic crises, the reason for this adjustment in monetary policy is that interest rates are at a high level, and there are signs of weakness in the US economy, especially in the employment market, supporting the move towards monetary policy normalization. It is believed that the Fed has a good chance of cutting interest rates 2 to 3 times this year, each time by 25 basis points, to provide a favorable macroeconomic policy environment for the performance of different financial assets. In terms of stocks, Xue Yonghui pointed out that the US is about to enter a rate-cutting cycle, lowering financing costs and benefiting companies in various industries to effectively deploy investments and increase profitability. The bank noted that the earnings growth of stocks outside the technology giants in the S&P 500 index is gradually improving, reducing the over-reliance of US stocks on technology giants and helping to sustain the stock market performance. Overall, the bank remains cautiously optimistic about the prospects of AI and technology stocks but will closely monitor potential risks and challenges, while also expecting other industries to bring positive momentum to the stock market. He mentioned that to build a diversified investment portfolio, simply allocating stocks is not enough, and investors should also consider bonds. Rate cuts undoubtedly benefit bond performance, and investors may consider US treasuries and related ETFs. US treasuries have lower risks and are suitable for most investors. As for corporate bonds, credit spreads have narrowed significantly to near-year lows, while economic slowdown may lead to financial and profit declines for some companies, widening credit spreads for corporate bonds. Therefore, US treasuries currently offer better risk-adjusted returns compared to corporate bonds. He pointed out that based on historical data, when the Hang Seng Index dividend yield falls to around 4.5%, the Hang Seng Index tends to rebound, and the current Hang Seng Index dividend yield level is also close to 4.5%. However, there is currently a lack of strong catalysts, unless related political risks decrease or China introduces surprising policies to increase policy support, a more conservative strategy will be adopted for Hong Kong stocks, with more allocations to defensive stocks. He also believes that current valuations of Hong Kong stocks are cheap and is optimistic about sectors such as technology in the long term.