Swiss Baocheng China research strategist and director of the Hong Kong research department, Deng Qizhi, said that after the introduction of mainland Chinese policies, there is a period of effectiveness testing. The second phase of the Hong Kong stock market's increase will be slower and more volatile. Foreign capital re-entering the market will be data-driven. If Chinese stocks are to move out of the "underweight" situation, profits must show significant improvement. The target for the Hang Seng Index in the next 12 months is 19,500 points. Deng Qizhi pointed out that when you lower expectations, the stock market can rise very quickly, which is a characteristic of the first phase. Since expectations cannot always be lowered, some positions will be reduced and profits taken while waiting for data and policy effectiveness, and positions will be added at lower levels. This is a natural risk management practice. He further pointed out that in the future, we need to consider how strong the government's execution is, as well as changes in economic data and first and second-hand housing market data. The People's Bank of China has set a new 300 billion RMB re-lending facility for affordable housing at an interest rate of 1.75%. State-owned enterprises will consider whether the cost of the loan and the return are reasonable proportions. If the central government finds them unreasonable, or policy adjustments need to be made, past examples have shown that subsidies may even be provided. Historically, it always starts with trials, and then its effectiveness expands, and the implementation of policies will be incremental. The expected policy testing period could be 3 to 6 months. Deng Qizhi believes that current Chinese data performance is mixed and fits the bank's expectations for the Chinese economy. During a stabilisation period, recovery in various sectors may be mixed. Consumer and tourism-related data may continue to be strong, but industries relying on traditional sectors, especially those driven by real estate, may see weaker data. The real estate market is worth trillions, and the policy effects need time to show and give market confidence. Deng Qizhi points out that foreign capital is still relatively underweight in A-shares and Hong Kong stocks. Improvements in data will eventually corporate profits. Significant improvements in Chinese stock profits are one of the indicators for foreign capital to gradually move out of being "underweight", at least needing to stabilize before hoping for profit growth this year. Due to the market's consensus being low, profit risks are low, but the impact of real estate policies will bring uncertainty. At the same time, attention should also be paid to the market conditions in the entire Asia region, as well as the ongoing US-China trade disputes. However, the market has become more pragmatic, and if the situation does not deteriorate further, foreign capital will be more willing to invest in China. In addition, Swiss Baocheng pointed out that the Third Plenum will have a greater impact on the valuation of Chinese stocks than profits, as it sets the tone for the long-term economic direction. The market is watching whether the central government will continue to maintain a relatively friendly attitude towards private enterprises.