Song Qinghui: The "Buy the Dip" strategy still has a winning edge; the financial sector should be vigilant about risk spillover impacts.

What industries could be affected by AI and financial risk spillovers?

Renowned economist Song Qinghui predicts that U.S. stocks are likely to continue fluctuating this week, with market direction depending on geopolitical developments and oil prices; given the recent adjustment in U.S. stocks, the downside potential may be limited. “If geopolitical conflicts do not show clear signs of easing, market risk appetite is expected to remain under pressure.” Strategically, it is recommended to control positions, reduce leverage, prioritize assets with stable cash flow and reasonable valuations, and maintain some liquidity to cope with uncertainties. He also added that the energy sector still holds relative advantages supported by high oil prices, and investors can focus on defensive sectors such as energy, utilities, and essential consumer goods; high-valuation AI stocks may continue to face pressure and increased volatility in the short term, and the financial sector should be alert to spillover risks.

● Experts believe that the direction of U.S. stock market movement this week depends on geopolitical developments and oil prices. The picture shows Qatar’s oil facilities. Associated Press

Hong Kong Wen Wei Po News (Reporter Ni Weichen, Shanghai report) Looking ahead, UBS CIO team emphasizes that maintaining diversified investments and having long-term investment capabilities can lead investors to more substantial returns. Investors with concentrated stock positions are advised to expand industry and regional exposure. Besides the technology sector, they can focus on U.S. stocks in industrial, financial, utility, non-essential consumer goods, and healthcare sectors, and appropriately increase allocations to quality fixed income products, gold, hedge funds, etc., to better cope with the increasingly volatile market environment.

“During periods of systemic tightening of macro liquidity, the probability of increased debt risks also rises.” Jin Qianjing, Chief Asset Allocation Analyst at Shenwan Hongyuan Research, believes that the overall valuation of U.S. tech stocks remains high. If liquidity shows a “trend of tightening” or industry trends are disproved, it could trigger a market crash. She also pointed out that although the market is scrutinizing the benefits of AI companies more strictly, the overall debt pressure of AI infrastructure remains manageable, and a “buy the dip” strategy in U.S. stocks still has a high success rate.

Financial sector should be alert to spillover risks

Renowned economist Song Qinghui

Mainland economist Song Qinghui predicts that U.S. stocks are likely to continue fluctuating this week, with market direction depending on geopolitical developments and oil prices; given the recent adjustment in U.S. stocks, the downside potential may be limited. “If geopolitical conflicts do not show clear signs of easing, market risk appetite is expected to remain under pressure.” Strategically, it is recommended to control positions, reduce leverage, prioritize assets with stable cash flow and reasonable valuations, and maintain some liquidity to cope with uncertainties. He also added that the energy sector still holds relative advantages supported by high oil prices, and investors can focus on defensive sectors such as energy, utilities, and essential consumer goods; high-valuation AI stocks may continue to face pressure and increased volatility in the short term, and the financial sector should be alert to spillover risks.

Bank of America Chief Investment Strategist Michael Hartnett’s report states that some investors currently expect the U.S.-Israel-Iran conflict not to last too long, private credit does not pose systemic risks, and policymakers have historically stepped in to support Wall Street. During this risk-averse phase, the market has not yet shown enough “bear market panic” signals to trigger contrarian buy signals. Once policymakers respond, market selling pressure will quickly ease. Original title: “Buying on dips” strategy still has a winning chance