Northbound Funds | Northbound Funds' net buying reached 1.388 billion, market concerns about interest rate cuts affecting net interest margins, domestic selling of HSBC Holdings exceeded 600 million Hong Kong dollars

According to the Zhitong Finance APP, on August 5th, in the Hong Kong stock market, Beishui had a net purchase of 13.88 billion Hong Kong dollars. Among them, the Shanghai-Hong Kong Stock Connect had a net buy of 1.415 billion Hong Kong dollars, while the Shenzhen-Hong Kong Stock Connect had a net sell of 0.28 billion Hong Kong dollars.

The top stocks with the most net purchases by Beishui were Tencent (00700), Xiaomi Corporation-W (01810), and China Construction Bank (00939). The top stocks with the most net sells by Beishui were HSBC Holdings (00005), PetroChina (00857), and China Shenhua Energy (01088).

Active trading stocks in the Shanghai-Hong Kong Stock Connect

Active trading stocks in the Shenzhen-Hong Kong Stock Connect

Tencent (00700) received a net purchase of 681 million Hong Kong dollars. In terms of news, Morgan Stanley released a research report stating that it is expected Tencent's mainland game revenue will increase by 10 to 15% year-on-year in the second quarter, while international game revenue will increase by 40 to 50% year-on-year. The strong game revenue is expected to offset the potential impact of the economic environment on advertising and payment businesses. In addition, the fourth batch of imported online game licenses for 2024 has been released, including Tencent's agent "Rainbow Six" national service. Citi believes that due to the stable and resilient growth of the mainland online game industry, as well as the regulated regulatory environment, it maintains a positive view on the industry.

China Construction Bank (00939) received a net purchase of 271 million Hong Kong dollars. In terms of news, Morgan Stanley previously pointed out that it continues to be optimistic about the performance of the domestic banking industry in the second half of the year. For southbound and A-share investors, the current dividend yield spread remains attractive. The bank believes that the domestic banking industry will mainly benefit from the regulatory focus shifting to safeguarding bank net profits in the second half of the year, as well as policy support for stabilizing macroeconomic growth prospects in the second half of the year. The bank expects that the income and profits of domestic banks will turn to growth in the second half of the year.

There was differentiation in oil stocks, with CNOOC (00883) receiving a net purchase of 79.25 million Hong Kong dollars, while PetroChina (00857) suffered a net sell of 372 million Hong Kong dollars. In terms of news, CICC released a report stating that the main reason for the oil price retreat since July is market concerns about global economic recession, the increase in mid-term oil and gas supply after the U.S. election, and the suppression of oil demand due to China's energy transition being a secondary factor. The bank expects that until late August, the market will still trade with recession expectations However, the risk implied in the current oil price is already relatively high. If OPEC+ maintains production levels in the fourth quarter, the oil price center is expected to remain at $80.

SMIC (00981) received a net purchase of HKD 54.19 million. On the news front, Donghai Securities stated that in July, the global semiconductor supply and demand continued to maintain a weak balance at the bottom stage. Mobile phones and smart wearables saw slight growth, AI servers and new energy vehicles maintained rapid growth, but overall supply is relatively abundant, semiconductor prices are balanced at the bottom, corporate inventories are relatively high, and it is expected that supply and demand will continue to be weakly balanced in August. The bank believes that industry demand is slowly recovering, prices are gradually returning to normal levels; under overseas pressure, the degree of localization in China is still increasing, and industry valuations are historically low.

Zijin Mining (02899) suffered a net sell-off of HKD 126 million. On the news front, the US ISM Manufacturing PMI fell significantly below expectations, with the unemployment rate unexpectedly rising to 4.3%, reaching a post-pandemic high, triggering the Sam rule, where recession trades outweigh rate cut trades. Last Friday, the gold price fell sharply after a high. Institutions believe that the short-term volatility in precious metal prices is more due to profit-taking by trading funds, and they still see the investment value of precious metals under the expectation of rate cuts and the long-term weakening of the US dollar credit.

China Shenhua (01088) faced a net sell-off of HKD 326 million. On the news front, Guohai Securities pointed out that recently, due to some coal stocks revising down their performance and some institutions taking a wait-and-see attitude towards coal prices, the coal sector has adjusted to a lower position. From a broad perspective, the industry investment logic remains unchanged. We expect that in the coming years, the coal industry will continue to maintain a tight balance, with high asset quality, ample cash flow on the books, and listed coal companies continuing to exhibit the "five highs" characteristics of high profitability, high cash flow, high barriers, high dividends, and high safety margins.

HSBC Holdings (00005) faced another net sell-off of HKD 648 million. On the news front, JPMorgan and Citigroup expect the Federal Reserve to launch aggressive easing measures within the year. Liao Zhiming, Chief Analyst of Bank at CMB International Securities, pointed out that the market behavior of foreign bank stocks falling reflects investors' concerns about the future profitability prospects of banks, especially as multiple major economies globally enter a rate-cutting cycle, leading to a trend of narrowing net interest margins for banks, further increasing concerns about the decline in bank profitability. In addition, HSBC Holdings also mentioned in its interim report the impact of rate cuts on bank operations.

In addition, Xiaomi Corporation-W (01810) received a net purchase of HKD 271 million. Meanwhile, China Mobile (00941) faced a net sell-off of HKD 160 million