Northbound Capital Trends | Northbound capital net purchases amounted to HKD 922 million, tech stocks continue to be favored, and domestic capital continues to increase its holdings in Tencent by over HKD 600 million

According to Zhitong Finance APP, on November 15th in the Hong Kong stock market, northbound capital had a net purchase of HKD 922 million, with the Shanghai-Hong Kong Stock Connect seeing a net sell of HKD 1.516 billion and the Shenzhen-Hong Kong Stock Connect seeing a net purchase of HKD 2.438 billion.

The stocks with the highest net purchases from northbound capital were Tencent (00700), Southern Hang Seng Technology (03033), and Ping An of China (02318). The stocks with the highest net sells were the Tracker Fund of Hong Kong (02800), Hang Seng China Enterprises (02828), and China Unicom (00762).

Active stocks in the Shanghai-Hong Kong Stock Connect

Active stocks in the Shenzhen-Hong Kong Stock Connect

Tech stocks continue to be favored by domestic capital. Tencent (00700) received a net purchase of HKD 630 million. On the news front, Daiwa Capital Markets' research report pointed out that Tencent's third-quarter earnings were solid and exceeded expectations. Revenue grew by 8% year-on-year to RMB 167.2 billion, in line with market expectations. The gross profit margin expanded by 4 percentage points year-on-year to 53.1%, also meeting market expectations. Non-International Financial Reporting Standards (Non-IFRS) operating profit increased by 18.6% year-on-year to RMB 61.3 billion. The firm believes that Tencent's gaming prospects are strong next year, as deferred revenue in the third quarter increased by 24% year-on-year to RMB 106.6 billion, indicating good growth momentum for the fourth quarter and the first quarter of next year.

Alibaba-W (09988), Xiaomi Group-W (01810), and Meituan-W (03690) received net purchases of HKD 390 million, HKD 262 million, and HKD 252 million, respectively. On the news front, Alibaba will release its third-quarter results today, having accumulated over HKD 3.4 billion in increased positions this week. CITIC Securities' research report pointed out that the Hong Kong stock market has been in continuous correction since October 8th, with the Hang Seng Index dropping more than two-thirds of the gains from September 25th to October 7th. During the correction period, both positive and negative factors were present, so the current correction in the Hong Kong stock market should be relatively sufficient. With the recent decline in the Hong Kong stock market and the divergence between the Hong Kong and A-share markets, the valuation of Hong Kong stocks and the AH premium once again reflect high cost-effectiveness. CITIC Securities believes that after the short-term impact ends, the Hong Kong stock market may welcome an upward trend, and now is a highly cost-effective time to position in Hong Kong stocks, with the tech sector being the most recommended China Ping An (02318) received a net purchase of HKD 491 million. According to news reports, Citigroup's research report pointed out that China Ping An shows strong growth potential in new business value (NBV). With product innovation and diversification of sales channels, the bank has given a "buy" rating for China Ping An's H-shares, with a target price of HKD 52.5. The report cited the company's management stating that it will achieve year-on-year positive growth in NBV in the first quarter of 2025, and the company has adjusted the incentive policy for its flagship product "YuXiangJinYue" to promote agents' sales of long-term policies (10 years and above).

Telecom stocks showed mixed performance, with China Mobile (00941) receiving a net purchase of HKD 423 million, while China Unicom (00762) faced a net sell of HKD 37.3655 million. In news, Wang Zhiqin, the head of the 6G promotion group and vice president of the China Academy of Information and Communications Technology, stated that the research on 6G technical standards will start in June 2025, with the technical research phase to be completed between 2025 and 2027, and the first version of the technical specifications to be completed by March 2029. Currently, partners in the 3GPP standards, including China, Europe, the United States, Japan, South Korea, and India, are jointly developing 6G standards. Guoyuan International previously pointed out that the three major operators are continuously increasing their dividend payout ratios. Based on current stock prices, their dividend yield is expected to further increase from the current level of around 6%.

Northbound funds sold Hong Kong stock ETFs, with the Tracker Fund of Hong Kong (02800) and Hang Seng China Enterprises (02828) facing net sells of HKD 5.744 billion and HKD 951 million, respectively; while Southern Hang Seng Technology (03033) received a net purchase of HKD 516 million. In news, Huatai Securities pointed out that with domestic fiscal policies further strengthening, the relative valuation of Hong Kong stocks has reached a neutral level. Under the three factors of a potential short-term slowdown in the tightening pace of overseas liquidity, Hong Kong stocks may find support at the current valuation level. However, considering the risk of overseas liquidity tightening beyond expectations next year, there may be limited further upside in valuation from the current level, and the market may continue to fluctuate within the current valuation range. In terms of allocation, Hong Kong stock holdings should be primarily stable.

In addition, CNOOC (00883) received a net purchase of HKD 216 million; SMIC (00981) received a net purchase of HKD 14.3437 million