Northbound Capital Trends | Northbound net purchases amounted to HKD 3.667 billion, Tencent's capital expenditure exceeded expectations, Northbound investors seized the opportunity to buy Tencent at over HKD 5.6 billion
On August 13th, Northbound funds net bought HKD 3.667 billion in the Hong Kong stock market. Among them, Tencent received a net purchase of over HKD 5.6 billion, despite its capital expenditure exceeding expectations leading to a drop in stock price, but Northbound funds seized the opportunity to buy on dips. SMIC and Hua Hong Grace also received net purchases of approximately HKD 834 million and HKD 822 million, mainly due to improved performance expectations. CIG was the largest net selling target
According to Zhitong Finance APP, on August 13th, the Hong Kong stock market saw a net purchase of HKD 3.667 billion from northbound funds. Among them, the Shanghai-Hong Kong Stock Connect recorded a net purchase of HKD 3.771 billion, while the Shenzhen-Hong Kong Stock Connect had a net sale of HKD 104 million.
The stocks with the highest net purchases from northbound funds were Tencent (00700), SMIC (00981), and Hua Hong Grace (01347). The stock with the highest net sale was CIG (06166).
Active stocks in the Shanghai-Hong Kong Stock Connect
Active stocks in the Shenzhen-Hong Kong Stock Connect
Tencent (00700) fell 4% after earnings, with a net purchase of HKD 5.616 billion throughout the day. Tencent announced a capital expenditure of HKD 52.8 billion for the second quarter, far exceeding market expectations. Citi stated that Tencent's second-quarter performance met expectations; it anticipates Tencent's capital expenditure this year may reach RMB 200 billion, thus lowering its adjusted net profit forecasts for 2026 and 2027 by 2% and 6%, respectively. However, the small and micro enterprises are about to expand trials, and Mix Yuan 4 is also expected to be released later this year, which is believed to further drive the company's valuation reassessment.
SMIC (00981) and Hua Hong Grace (01347) received net purchases of HKD 834 million and HKD 822 million, respectively. Both companies released their earnings after the market closed. SMIC's revenue for the second quarter exceeded USD 3 billion, with a gross margin rising to 25.3%, showing a comprehensive improvement in profitability. Management expects revenue and gross margin to further increase in the third quarter. Hua Hong Grace's second-quarter sales revenue reached USD 717.5 million, a historical high, with a year-on-year growth of 26.8% and a quarter-on-quarter growth of 8.6%; the gross margin was 16.5%, up 5.6 percentage points year-on-year and 3.5 percentage points quarter-on-quarter.
Kingboard Laminates (01888) received a net purchase of HKD 346 million. Bank of America Securities released a research report stating that Kingboard Laminates' vertical integration capability significantly enhances its profit sensitivity to upstream material shortages and price increases. It is expected that the average selling price of CCL for Kingboard Laminates will expand by 130% this year and 40% in the first half of next year. The analysis indicates that if the average selling price of CCL expands by 100%, it will boost the company's CCL gross margin by 28 percentage points this year and lead to a 200% increase in earnings per share MINIMAX-W (00100) received a net purchase of HKD 337 million. The Hong Kong Stock Exchange recently announced that MINIMAX has met the rapid inclusion criteria for the Hong Kong Stock Exchange Technology 100 Index and will be included in the Hong Kong Stock Exchange Technology 100 Index and the Hong Kong Stock Exchange Technology and US Technology 100 Index after the market closes on August 12, with official effect from August 13. It is worth noting that MINIMAX was included in the Hong Kong Stock Connect on August 6.
Changfei Optical Fiber Cable (06869) received a net purchase of HKD 163 million. Daiwa stated that Changfei Optical Fiber benefits from the current strong upward cycle in the optical fiber industry, and the company is expected to be supported by its technological leadership and the upward potential of its optical interconnection business, with a forecasted compound annual growth rate of 137% for the gross profit of the optical interconnection business, driving a compound annual growth rate of 135% for net profit from 2025 to 2028.
In addition, Alibaba-W (09988) and Zhaoyi Innovation (03986) received net purchases of HKD 189 million and HKD 139 million, respectively. Meanwhile, Cambridge Technology (06166) experienced a net sell-off of HKD 47.84 million
