Manulife Investment Management's Senior Portfolio Manager for Greater China Equities, Xie Qigang, and the Greater China Equities team analyzed the latest round of stimulus measures and pointed out that the mainland China and Hong Kong stock markets are at a crucial juncture, and investors need to pay attention. The US beginning an interest rate cutting cycle is beneficial for mainland China, Hong Kong stocks, and interest rate-sensitive industries. The MSCI China Index industry's earnings forecast for the first half of 2024 has been revised upwards. Chinese company valuations are increasing, with nearly 600 companies announcing the distribution of interim dividends this year, the highest number ever recorded. The Chinese real estate industry is gradually improving, with authorities introducing industry stimulus measures. Chinese enterprises' "go global" strategy is competitive and can improve their market share overseas. Entering the fourth quarter of 2024, Manulife Asset Management is bullish on the following industries: first, the industrial sector, with a focus on automotive parts manufacturers and leading companies in advanced manufacturing, as these companies have better earnings in the first half of 2024 compared to peers, with significant growth and revenue guidance, as well as increasing market share. Second, the information technology sector, benefiting from the global recovery of the smartphone market. Third, the healthcare sector, with a focus on companies in biopharmaceuticals and medical devices, which have rich research projects, competitive quality products, and a "go global" strategy. Manulife Asset Management pointed out that since the end of September, China has implemented a series of policy stimulus measures to support the economy. These measures include interest rate cuts, support for the real estate market, providing liquidity to the stock market, fiscal stimulus measures, and strengthening the capital position of banks. These coordinated and comprehensive policy measures help drive collaboration between individuals, businesses, banks, and non-bank financial institutions, and promote economic activity. Compared to the policy measures implemented in July, this round of monetary easing and fiscal stimulus measures covers different areas such as the real estate market, consumption, and finance, which are expected to boost investor confidence in the Chinese economy. The latest round of monetary easing measures cover policy interest rates, reserve requirements, and mortgage rates, including a 0.2 percentage point cut in policy interest rates (7-day reverse repurchase operation rate) and a 0.5 percentage point reduction in reserve requirements. The People's Bank of China emphasized that there may be further reductions in reserve requirements by the end of the year, a 0.25 to 0.5 percentage point cut in existing mortgage rates, and a decrease in the minimum down payment ratio for second homes from 25% to 15%. In addition, to further facilitate financing, the central bank will establish a 500 billion yuan asset swap facility, allowing non-bank financial institutions (funds, insurance companies, and securities firms) to borrow directly from the central bank using high-quality collateral. The central bank will also introduce a 300 billion yuan special refinancing facility for corporate stock repurchases, believed to accelerate the pace of share buybacks. Manulife Asset Management stated that with the US beginning an interest rate cutting cycle in September, China has more room to implement comprehensive monetary easing policies to improve overall liquidity in the system and trigger immediate effects on the real economy. Lower actual loan rates and deposit costs are advantageous for mainland Chinese banks, while reserve requirement cuts can provide longer-term liquidity to the banking system (estimated at 1 trillion yuan). In stimulating real estate demand, reducing mortgage rates and down payment ratios can improve housing affordability and encourage potential buyers to enter the market, which is crucial for boosting real estate market transactions. After the policy announcement on September 24th, the domestic real estate market responded positively immediately. According to data from the Ministry of Housing and Urban-Rural Development, during the Golden Week holiday, viewing volumes in cities offering housing discounts increased by at least 50%. Regarding the Hong Kong stock market, after the policy announcement at the end of September, trading and transaction volumes in the market immediately rebounded, with record-high market turnover. Valuations have also improved, although they are still below historical averages. Potential short-term catalysts include, first, expectations of the government intensifying monetary easing measures, with the central bank expressing intentions to further cut reserve requirements, reflecting China's efforts to stimulate the economy and support the real estate industry. Second, potential fiscal policies are expected to be introduced, with the National Development and Reform Commission developing plans for more aggressive fiscal measures and announcing incremental policies, including speeding up the issuance of special bonds to local governments to support regional economic growth. The authorities also support urban renewal projects, encourage private capital participation in infrastructure projects, and support more qualified private capital projects (including issuing infrastructure REITs). Third, the authorities further relax restrictions on home purchases, continue to provide policy support for urbanization, and implement measures to reduce housing inventory, which will boost the market. Fourth, in August, China announced 20 key measures to promote service consumption. The government may increase funding support for programs such as trading in old items for new ones and equipment upgrades, which can further stimulate the consumer industry in the coming months.