THE LONG VIEW

INTELLIGENCE BRIEFING: Hong Kong's 2026-2027 Red Horse Red Sheep Cycle - Strategic Patience Required Amid Geopolitical Crosscurrents Executive Summary: I Ching analysis reveals Hong Kong entering a critical 2026-2027 "Red Horse Red Sheep" cycle historically correlated with turbulence (referencing 1966-67 riots). Current economic conditions show stark divergence between manipulated stock markets and weakening real economy, with notable corporate indicators like McDonald's property divestments signaling deep structural concerns. The assessment identifies 2028 as potential inflection point pending leadership transitions and global geopolitical stabilization. Immediate strategy emphasizes defensive positioning with selective engagement only after 2027-2028 threshold. Primary Indicators: - 60-year cyclical pattern alignment with historical turbulence periods (2026-2027 mirrors 1966-1967) - Stock market manipulation creating false economic signals while real economy deteriorates - Corporate retreat indicators (McDonald's flagship property divestment representing 60% value drop) - "Inner volume" (neijuan) economic pressure spreading from mainland to Hong Kong - Geopolitical instability factor with Trump administration adding nuclear dimension - I Ching hexagram analysis showing Hong Kong in "waiting for opportunity" phase (Qian heaven over Xun wind) Recommended Actions: - Maintain "sell only, no buy" equity strategy until post-2027 cycle completion - Adopt defensive personal financial positioning with emphasis on liquidity preservation - Prepare for potential 2028 inflection point with contingent planning - Focus on skill development and self-improvement during economic consolidation phase - Monitor leadership transitions and policy responses for timing strategic moves - Implement "observer" stance toward property markets until clearer bottom signals emerge Risk Assessment: The Red Horse Red Sheep cycle carries historical precedent for significant disruption, with I Ching calculations suggesting 50% human factor influence currently skewed toward instability given US-China tensions. The divergence between financial markets and real economy creates asymmetric risk exposure, while the "inner volume" economic compression threatens to accelerate Hong Kong's structural challenges. However, classical wisdom indicates extreme conditions inevitably reverse - the current foundation-building phase (Qian/Xun hexagram combination) suggests eventual renewal post-2028, though navigation requires exceptional strategic patience. The hidden opportunity lies in being positioned when the cycle turns, but premature action risks being caught in the downward momentum. —Sir Edward Pemberton Dispatch from Moves S2