Founder Securities(SH:601901) 智通财经网·2025-08-26 08:21Core Viewpoint - The report from Founder Securities indicates that the Hong Kong stock market has underperformed compared to the A-share market in the past two months, but it remains attractive in terms of valuation, with potential for future growth driven by sectors like artificial intelligence and innovative pharmaceuticals, as well as continued inflow of southbound and foreign capital [1][2]. Valuation and Market Performance - The A-share market has seen a significant increase, with the Wind All A Index rising by 19.1% since June 23, and some indices like the Sci-Tech Innovation Board and the ChiNext Index recording over 30% gains [2]. - As of August 22, 2025, the Hang Seng Index's TTM price-to-earnings ratio is 11.5x, significantly lower than major global indices such as the Dow Jones (31.6x), S&P 500 (28.6x), FTSE 100 (20.3x), and Nikkei 225 (19.6x) [2][8]. - The valuation of the Hang Seng Tech Index stands at 21.8x, which is also considerably lower than the Nasdaq Index at 41.2x [2][8]. Capital Flow Dynamics - The capital structure of the Hong Kong stock market consists of foreign capital (international intermediaries), Hong Kong capital (local intermediaries), and domestic capital (Chinese intermediaries and Stock Connect) [2]. - Since 2020, there has been a net outflow of foreign capital, with an increasing outflow rate expected post-2024. However, recent dovish signals from the Federal Reserve and improved Sino-U.S. relations may lead to a recovery in foreign capital inflow into the Hong Kong market [2][3]. Southbound Capital Inflow - There has been a significant inflow of southbound capital into the Hong Kong stock market this year, with a cumulative inflow of 891.09 billion yuan as of August 22, 2025, which is substantially higher than the same period in 2021 [3][12]. - The allocation ratio of domestic active equity funds to Hong Kong stocks has been increasing, reaching 19.9% by the second quarter of 2025 [3]. Sector Representation and Scarcity - The current A-share market is characterized by a "technology bull" trend, primarily focused on growth sectors like AI and robotics. The Hong Kong market features representative and scarce sectors such as artificial intelligence and innovative pharmaceuticals, which align with emerging industry trends [3]. - Several leading companies in sectors like electronics and new energy from the A-share market have expressed intentions to list in Hong Kong, which could enhance the asset quality of the Hong Kong market [3].