Along with the intensifying and spreading trade confrontation between China and the United States, trade war fears continue to roil global stock markets. The People’s Bank of China also cut some banks’ reserve requirements to boost lending. However, among the released liquidity of 700 billion yuan, 500 billion yuan are used to conduct debt-for-equity swaps which is different from the market expectation. This leads to a capital outflow from both Hong Kong and China’s stock market. The market is likely to resume stability and fundamental driven when China and U.S. are engaged in productive talks to defuse tensions, or after HK listed companies publish their financial reports in July and August. Investor should be suggested to remain low risk exposure until the market is stabilized again. Further reducing positions in equities are recommended if market presents a decent rebound.