Morningstar released its outlook for Asian stock markets for the third quarter. It is expected that the market will continue to fluctuate in the third quarter, as the mainland will continue to implement the zero-clearing policy, and the market is pricing the US Federal Reserve to raise interest rates to cope with inflation. It is recommended that investors should pay attention to stock selection in the process of reducing risk, and it is recommended that priority be given to stocks with higher discounts and "moat". Morningstar is more optimistic about the outlook for US economic growth than the market, and believes that inflation may be lower than expected in 2023 and 2024 under tight monetary policy. The US economy is expected to grow by 3 per cent, 2.2 per cent and 3.2 per cent respectively from 2022 to 2024. Chen Lizi, director of Asian equity research at Morningstar, predicts that the mainland's regulation of the science and technology industry is coming to an end and is being fine-tuned, and that fines from earlier investigations may continue to be announced in the future, but it is believed that there will be no new additional policies to restrict large technology companies. The bank favors large technology stocks such as 00700.HK, Alibaba and 09618.HK and believes that fair values are now at a considerable discount to their cash flow potential. In response to the recent outage of supply of uncompleted properties in the mainland, Hu Qitai, a senior stock analyst at Morningstar, believes that the risk of a chain reaction such as a real estate or mortgage crisis is very low, because past overseas financial crises are more related to liquidity. in addition to the real estate industry, financial derivatives are also involved. The proportion of mortgage-backed securities in the mainland is also very low. He believes that future buyers will be more interested in quality and developers with strong balance sheets, and it is expected that China Resources Land (01109.HK) and China overseas (00688.HK) will benefit. Hong Kong developers with projects in the mainland are also expected to have good sales performance.