Galaxy Strategy of China interprets the decision of the Federal Reserve's September meeting: be cautious of short-term risks as the risk premium narrows.

The Chinese Galaxy Strategy Research Report stated that the decision of the Federal Reserve's September interest rate meeting was in line with market expectations. What impact will this have on the risk preference of A-share market? In the short term, the risk premium will narrow. Due to strong market expectations of a rate cut, some positive factors may be released in advance. Attention should be paid to the fluctuations after the expectations are realized, as well as the interactive effects of subsequent policy paths and economic data. As market expectations of a rate cut have partially been realized, global equity markets may face choppy pressure in the short term. From a medium to long-term perspective, the rate cut by the Federal Reserve will benefit the trend of A shares. The passive appreciation of the RMB exchange rate will improve risk preference. RMB appreciation will help alleviate foreign concerns about exchange rate volatility and enhance the attractiveness of the A-share market. In terms of structure, sectors like technology growth, high dividend, and interest rate-sensitive sectors in the A-share market will be the main beneficiaries of funds. What impact will this have on the liquidity of Hong Kong stocks? Improvement in liquidity: Declining Hong Kong dollar interest rates and capital inflows. Changes in fund availability: dual main lines of high dividend and technology growth. Against the backdrop of the Federal Reserve's rate cut, foreign preferences for the Chinese Hong Kong market show clear structural characteristics, mainly focusing on technology, financial, and some consumer and manufacturing sectors, especially in the technology and healthcare sectors.