Northbound Capital Trends | Northbound capital net purchases amounted to HKD 19.656 billion, with domestic investors aggressively buying Hong Kong stock ETFs, and Tencent received an increase in holdings of over HKD 1.6 billion after earnings

According to Zhitong Finance APP, on November 14th, in the Hong Kong stock market, northbound funds had a net purchase of HKD 19.656 billion, of which the Shanghai-Hong Kong Stock Connect had a net purchase of HKD 10.052 billion, and the Shenzhen-Hong Kong Stock Connect had a net purchase of HKD 9.604 billion. The stocks with the highest net purchases from northbound funds were the Tracker Fund of Hong Kong (02800), Tencent (00700), Alibaba-W (09988), Hang Seng China Enterprises (02828), and Meituan-W (03690).

Active stocks in the Shanghai-Hong Kong Stock Connect

Active stocks in the Shenzhen-Hong Kong Stock Connect

Northbound funds aggressively purchased Hong Kong stock ETFs, with the Tracker Fund of Hong Kong (02800), Hang Seng China Enterprises (02828), and Southern Hang Seng Technology (03033) receiving net purchases of HKD 4.654 billion, HKD 0.873 billion, and HKD 0.502 billion, respectively. On the news front, the October U.S. CPI data met expectations, which temporarily stabilized the expectation of continued interest rate cuts in December, but the U.S. dollar has not yet reached a downward turning point. As of the time of writing, the U.S. dollar index rose to 106.89, reaching a new high in over a year. CICC believes that the future trend of the RMB against the U.S. dollar will mainly be driven by the relative changes in the economic fundamentals of the two countries, and there is no need to overly worry about foreign capital continuously flowing out of the Hong Kong stock market due to potential trade disruptions. Looking ahead to 2025, as a series of policies in China gradually take effect and investor expectations continue to improve, the bank predicts that the Hong Kong stock market will welcome a reversal trend.

Tech stocks are favored by domestic capital, with Tencent (00700) receiving a net purchase of HKD 1.628 billion after its earnings report. On the news front, Tencent Holdings released its third-quarter report, achieving revenue of RMB 487.811 billion in the first three quarters, an increase of 7% year-on-year; the profit attributable to equity holders of the company was RMB 142.749 billion, an increase of 62% year-on-year. In the third quarter, it achieved revenue of RMB 167.193 billion, an increase of 8% year-on-year; the profit attributable to equity holders of the company was RMB 53.23 billion, an increase of 47% year-on-year. Citigroup believes that Tencent's overall performance in the third quarter met expectations, and the adjusted operating profit significantly exceeded expectations, mainly due to the high contribution from profits of joint ventures Alibaba-W (09988), Meituan-W (03690), Xiaomi Group-W (01810), and Kuaishou-W (01024) received net purchases of HKD 938 million, HKD 710 million, HKD 415 million, and HKD 161 million, respectively. This week, the internet leaders will successively disclose their third-quarter reports. Goldman Sachs released a research report stating that it expects the third-quarter revenues of internet giants to meet expectations, while investors will focus on the fourth-quarter guidance due to policy changes in mainland China at the end of September, as well as management's comments on recent consumption trends, progress in advertising technology, AI cloud growth, capital expenditure investments, how companies respond to potential tariffs on cross-border businesses in the U.S., and any updates regarding shareholder return policies.

Sunac China (01918) received a net purchase of HKD 174 million. On the news front, on November 13, the Ministry of Finance and three other departments issued an announcement on tax policies to promote the stable and healthy development of the real estate market, clarifying multiple tax incentive policies to support the real estate market. Regarding deed tax, the area standard for enjoying the current 1% low tax rate has been raised from 90 square meters to 140 square meters; for land value-added tax, the lower limit of the pre-collection rate for land value-added tax in various regions has been uniformly reduced by 0.5 percentage points; for value-added tax, individuals selling houses purchased for more than two years will be exempt from value-added tax.

Fourth Paradigm (06682) received a net purchase of HKD 123 million. On the news front, on November 7, MSCI announced the results of the semi-annual review of the MSCI series indices, with relevant adjustments officially taking effect after the close of trading on November 25. The MSCI Global Small Cap Index includes 11 stocks from the China region, including Fourth Paradigm. Haitong Securities previously pointed out that the company's revenue grew steadily in the first half of the year, maintaining a clear trend of reducing losses, further confirming the feasibility of the company's current business model. The company is currently focused on "productizing AI technology" and assisting AI implementation across various industries through the "Prophet Inside model," making the company's long-term growth prospects promising.

In addition, SMIC (00981) received a net purchase of HKD 305 million, and CNOOC (00883) received a net purchase of HKD 13.8085 million