Northbound Capital Trends | Northbound capital increased its holdings in Tencent by nearly HKD 8.5 billion
On January 8th, the Hong Kong stock market saw a net purchase of HKD 14.873 billion from northbound capital, with Tencent receiving a net purchase of HKD 8.495 billion. Tencent has been listed by the U.S. Department of Defense as a Chinese military enterprise, and Citigroup believes this move may not be correct, suggesting that Tencent is likely to cooperate with the U.S. Department of Defense to resolve misunderstandings. DBS stated that Tencent's business model is unrelated to the military and believes there is a chance of being removed from the list. The Tracker Fund of Hong Kong and China Shenhua received net purchases of HKD 1.923 billion and HKD 569 million, respectively
According to Zhitong Finance APP, on January 8th in the Hong Kong stock market, northbound capital had a net purchase of HKD 14.873 billion, of which the Shanghai-Hong Kong Stock Connect had a net purchase of HKD 9.506 billion, and the Shenzhen-Hong Kong Stock Connect had a net purchase of HKD 5.367 billion.
The stocks with the highest net purchases from northbound capital were Tencent (00700), Tracker Fund of Hong Kong (02800), and China Shenhua (01088). The stocks with the highest net sales were Sunny Optical (02382) and Alibaba-W (09988).
Active stocks in the Shanghai-Hong Kong Stock Connect
Active stocks in the Shenzhen-Hong Kong Stock Connect
Tencent (00700) received a net purchase of HKD 8.495 billion. In terms of news, Tencent was included in the list of Chinese military enterprises by the U.S. Department of Defense. Citigroup issued a report stating that they understand the market's panic reaction but believe that Tencent's inclusion on the list does not necessarily mean there is sufficient evidence to confirm it as the right decision. The bank believes Tencent will strive to cooperate with the U.S. Department of Defense to resolve any misunderstandings and noted that several companies successfully removed themselves from the list after providing effective explanations last year. DBS stated that Tencent's business model primarily revolves around social networks and online gaming, is not a state-owned enterprise, and has not participated in significant military projects, believing there is a good chance it will be removed from the list later.
Tracker Fund of Hong Kong (02800) received a net purchase of HKD 1.923 billion. In terms of news, Zhongtai International believes that the Hong Kong stock market is likely to maintain a volatile pattern in the short term, with high U.S. dollar interest rates, a strong U.S. dollar index, and a weak RMB putting certain pressure on the Hong Kong stock market, but marginal improvements in fundamentals and policy expectations also provide some support. Guotai Junan Research believes that domestic policies are expected to continue to exert force in 2025, and Hong Kong stock earnings will continue to improve slightly.
China Shenhua (01088) received a net purchase of HKD 569 million. In terms of news, on January 8th, the China Coal Transportation and Marketing Association released a weekly report on the operation of the coking coal market, stating that from the perspective of coking coal supply and demand, under the dual pressure of strengthened safety supervision and market downturn, state-owned large mines have actively controlled production during the holiday, and the subsequent coking coal production will enter a phase of supply contraction, with the pressure of oversupply in the market expected not to increase further. Huayuan Securities pointed out that although there are many factors affecting the future coal price trend, it is not recommended to linearly extrapolate the coal price trend since late November, as temperature effects are only short-term disturbances. It is suggested to focus on the medium- to long-term supply and demand pattern and further observe the pace of import coal policies and domestic stimulus policies China Mobile (00941) received a net buy of HKD 497 million. On the news front, Guoyuan Securities pointed out that the iteration speed of wireless communication is slowing down, and operators' capital expenditures are becoming more moderate. The continuous optimization of the assessment system for state-owned enterprise leaders and the acceleration of emerging business expansion are noted. With the overall stable performance of the three major operators in the traditional C+H sectors, emerging businesses have become new growth drivers, combined with rate optimization and more cautious capital expenditures under refined management, it is expected that operators' performance will show better results in the future. Meanwhile, the dividend rate guidance provided by China Mobile, China Telecom, and China Unicom continues to rise. In a low-interest-rate environment, the dividend yield of operators also has good allocation value.
SMIC (00981) received a net buy of HKD 332 million. On the news front, CCB International released a research report stating that looking ahead to 2025, the growth of China's semiconductor industry will achieve mean reversion based on the levels of 2024. However, thanks to the rise of artificial intelligence and the domestic semiconductor supply chain, the industry is still expected to achieve excellent market performance in 2025. The bank believes that the core driving force for China's wafer foundries in 2025 will be potential government stimulus plans and more detailed policy support for the Chinese semiconductor industry.
Industrial and Commercial Bank of China (01398) received a net buy of HKD 318 million. On the news front, JP Morgan published a report predicting that the performance of Hong Kong banking stocks will outperform the market this year, believing that bank dividend yields are stable and high, and the widening dividend spread supports bank stock prices. The bank expects that the earnings per share of Hong Kong banking stocks will grow steadily this year, the reduction in net interest margin will ease, and fee income growth will recover. The optimization of deposit costs and portfolios brings upward risks to net interest margins.
XPeng Motors-W (09868) received a net buy of HKD 91.91 million. On the news front, XPeng Huitian recently showcased its split-type flying car "Land Aircraft Carrier." XPeng Huitian officially stated that its flying car manufacturing base is currently under construction, which will be the world's first flying car factory to utilize modern assembly lines for large-scale production, aimed at producing the aircraft portion of the split-type flying car "Land Aircraft Carrier," with an annual production capacity planned at 10,000 units, scheduled for completion in the third quarter of next year, and the flying car is expected to be mass-produced and delivered in 2026.
Sunny Optical (02382) faced a net sell of HKD 265 million. On the news front, the National Development and Reform Commission and the Ministry of Finance issued a notice regarding the implementation of large-scale equipment updates and the replacement of old consumer goods with new ones by 2025, mentioning that subsidies for purchasing new digital products such as mobile phones will be implemented. UBS stated that the mainland mobile phone subsidies are expected to stimulate mid-range mobile phone sales, but most new iPhone models do not qualify. Additionally, Apple's rating was rarely downgraded to "sell" by institutions on Tuesday Eastern Time.
In addition, Xiaomi Group-W (01810), CNOOC (00883), and Weimob Group (02013) received net buys of HKD 141 million, HKD 82.8 million, and HKD 25.67 million, respectively. Meanwhile, Alibaba-W (09988) faced a net sell of HKD 107 million