Market Overview - The Hong Kong stock market showed resilience, with the Hang Seng Index closing at 25,935.41 points, down only 16.99 points or 0.07% [1] - The Hang Seng Technology Index closed at 5,785.85 points, down 32.44 points or 0.56% [2] Company Performance - Hong Kong Exchanges and Clearing (00388.HK) reported a total revenue of HKD 21.851 billion for the first three quarters, a year-on-year increase of 37%. The main business revenue was HKD 20.438 billion, up 41%, and net profit reached HKD 13.419 billion, up 45% [4] - In Q3 alone, the exchange achieved total revenue of HKD 7.775 billion, a 45% increase year-on-year, with main business revenue of HKD 7.484 billion, up 54%, and net profit of HKD 4.9 billion, up 56% [4] - Sirus (09927.HK) listed today, initially facing a drop below the issue price but later recovered to close at HKD 131.5 [5] - Zai Lab (02617.HK) surged by 26.3% following a partnership agreement with Neurocrine for the development of NLRP3 inhibitors, with a total potential value of approximately USD 882 million [7] Sector Performance - Mechanical stocks led the gains, with Weichai Power rising over 4%, Zoomlion up over 3%, and both China National Heavy Duty Truck Group and CRRC up over 2% [9] - In the coal sector, AnYue Asia increased over 4%, China Coal Energy rose over 3%, and Yanzhou Coal Mining gained over 2% [10] - Food and beverage stocks also performed well, with Master Kong Holdings up over 4%, Anjoy Foods up over 2%, and Haitian Flavoring & Food up over 1% [11] Capital Flow - Southbound funds recorded a net purchase of over HKD 10.3 billion in Hong Kong stocks by the market close [11] Market Outlook - Haitong International believes that Hong Kong stocks are undervalued compared to historical levels and major global indices, with long-term bullish drivers including foreign capital inflow expectations and sustained large-scale inflows of southbound funds, potentially exceeding RMB 1.5 trillion by 2026 [13]

Market Overview - The Hong Kong stock market opened lower today, with the Hang Seng Index at 25,701.63 points, down 250.77 points, a decline of 0.97% [1] - The Hang Seng Tech Index opened at 5,716.54 points, down 101.75 points, a drop of 1.75% [1] Impact of US Market - Analysts noted that the drop in the Hang Seng Index was primarily influenced by a significant decline in the US stock market the previous night, where the Dow Jones fell by 0.53% and the Nasdaq dropped over 2% [3] New Listings - The new energy vehicle company, Seres (09927.HK), faced a poor market debut, with its stock price falling nearly 10% to a low of 118 HKD from the issue price of 131.5 HKD [3][4] Sector Performance - Technology stocks collectively declined, with Bilibili down over 5%, Kuaishou down over 3%, and Alibaba and Tencent both down over 2% [4] - Gold stocks continued to fall, with Zijin Mining International down over 3% [4] - The lithium battery sector also saw most stocks decline, with Ganfeng Lithium down over 4% [4] Capital Flows - According to CICC, the active performance of Hong Kong stocks this year is closely related to liquidity, driven by international funds seeking asset diversification and domestic funds looking for higher returns through southbound channels [5] - Notably, individual investors have played a significant role in the recent inflow of southbound funds, indicating that while institutional capital may be limited, the potential and variability of individual investors could significantly impact the market [5] Regulatory Changes - UBS commented on the recent adjustment of the gold value-added tax deduction policy, suggesting it aims to enhance regulation of investment gold products, which may reduce liquidity and shift some investment demand towards gold ETFs [5] - The new tax burden is expected to be largely passed on to consumers in the gold jewelry sector, potentially putting pressure on recent gold consumption demand [5]

Core Insights - Significant net inflow of southbound funds from October 13 to 17, 2025, totaling 118.12 billion yuan year-to-date, with the banking sector receiving a net inflow of 6.03 billion yuan, leading among industries [1] - The narrowing of the 10-year U.S.-China Treasury yield spread, declining U.S. bond yields, and a lower U.S. dollar index indicate an improvement in the external liquidity environment [1] - A 288% year-on-year increase in new margin trading accounts in September, reaching a new high for the year, reflects a recovery in market confidence and continuous inflow of incremental funds, supporting undervalued sectors including banking [1] - The Hong Kong Stock Connect Financial ETF (513190) tracks the CSI Hong Kong Stock Connect Mainland Financial Index, being the ETF with the highest H-share bank content [1]

Group 1 - The Hong Kong stock market showed mixed performance on October 17, with the Hang Seng Index down 0.14% at 25,851.94 points, while the Hang Seng Tech Index fell 0.07% and the National Enterprises Index saw a slight increase [1] - Southbound funds recorded a net purchase of HKD 15.822 billion in Hong Kong stocks on October 16, surpassing the HKD 100 billion mark again, bringing the total net inflow for the year to over HKD 1.2 trillion, setting a new annual record [1] - The Hang Seng Tech Index has risen over 34% year-to-date as of October 16, driven by significant inflows from southbound funds, which align with the "low valuation + high elasticity" characteristics of the Hong Kong tech sector [1] Group 2 - As of October 16, the latest valuation (PETTM) of the Hang Seng Tech Index ETF (513180) is 22.88 times, which is at the 28.79% valuation percentile since the index was launched, indicating that over 70% of the time, valuations have been higher than the current level [2] - The Hang Seng Tech Index remains in a historically undervalued range, with high elasticity and growth characteristics providing greater upward momentum [2] - Investors without a Hong Kong Stock Connect account can access core Chinese AI assets through the Hang Seng Tech Index ETF (513180) [2]

Group 1 - As of October 14, 2023, southbound capital has accumulated a net inflow of 11,985.67 billion HKD this year, setting a historical high for annual net inflow [1][2] - The Hang Seng Index has risen over 26% and the Hang Seng Tech Index has increased over 32% year-to-date, with stocks having a market capitalization exceeding 1 trillion HKD showing an average increase of over 30% [1][4] - Southbound capital has been the largest source of incremental funds for the Hong Kong stock market, with over 80% of trading days this year witnessing net inflows [2][3] Group 2 - As of October 13, 2023, southbound capital holdings reached 5,458.21 billion shares, an increase of 821.50 billion shares since the beginning of 2023, with a total market value of 63,500 billion HKD [2] - The financial, information technology, and consumer discretionary sectors have the highest market values held by southbound capital, amounting to 14,032.34 billion HKD, 13,707.60 billion HKD, and 9,006.28 billion HKD respectively [2] - Major stocks held by southbound capital include Tencent Holdings exceeding 6,800 billion HKD and Alibaba-W, China Mobile, and others exceeding 2,000 billion HKD [2][3] Group 3 - Recent adjustments in the Hong Kong stock market have seen the Hang Seng Index drop over 5% and the Hang Seng Tech Index drop over 8% in October [5] - Analysts suggest that while short-term volatility may persist, the long-term upward trend for the Hong Kong stock market remains intact, supported by domestic growth policies and stabilizing investor sentiment [5][6] - The technology sector is expected to benefit from current industry trends, with potential for further inflows from foreign capital and continued support from southbound capital [6]

Core Viewpoint - CITIC Securities maintains a "Buy" rating for Hong Kong Exchanges and Clearing (HKEX) with a target price of 543 HKD, supported by expectations of liquidity from the Federal Reserve's interest rate cuts, continuous inflow of southbound funds, and valuation advantages [1] Group 1: Market Conditions - The Hong Kong stock market is expected to maintain high activity levels in Q4 due to three main factors: the Federal Reserve's shift in monetary policy providing liquidity support, continuous inflow of southbound funds, and significant valuation advantages [2][3] - Since April, HKEX has shown a recovery in overall valuation after a significant decline, driven by high average daily trading volume and sustained buying from southbound funds [1] Group 2: Financial Projections - For Q3 2025, the company is projected to achieve revenue and other income of 79.11 billion HKD, a year-on-year increase of 47.26%, and a net profit attributable to shareholders of 48.24 billion HKD, up 53.38% year-on-year [2] - Revenue forecasts for 2025, 2026, and 2027 are expected to grow by 27.94%, 5.93%, and 1.17% respectively, reaching 286.25 billion HKD, 303.21 billion HKD, and 306.75 billion HKD [2] Group 3: Valuation and Investment Appeal - As of October 10, the PE (TTM) ratio for HKEX is 36.49x, which is at the 72.15%, 71.85%, and 47.43% percentiles for the past 1, 3, and 5 years respectively, indicating a potential for further valuation recovery [1] - The Hang Seng Index's PE-TTM is approximately 11.95x, placing it at the 64th percentile over the past 20 years, highlighting the relative valuation advantage of Hong Kong stocks compared to the CSI 300's 14.24x [3]

Core Viewpoint - CITIC Securities maintains a "Buy" rating for Hong Kong Exchanges and Clearing (HKEX) with a target price of HKD 543, citing liquidity expectations from the Federal Reserve's interest rate cuts, continuous inflow of southbound funds, and valuation advantages as key factors supporting the high activity level in the Hong Kong stock market in Q4 [1] Group 1: Market Conditions - The Hong Kong stock market has shown a recovery in valuation since April, driven by high average daily trading volume and sustained buying from southbound funds [1] - As of October 10, 2025, HKEX's PE (TTM) stands at 36.49x, positioned at the 72.15%, 71.85%, and 47.43% percentiles over the past 1, 3, and 5 years respectively [1] - The company is expected to achieve high year-on-year growth in Q3 earnings, with projected revenues of HKD 79.11 billion (up 47.26%) and net profit of HKD 48.24 billion (up 53.38%) [2] Group 2: Future Projections - Revenue forecasts for 2025, 2026, and 2027 are projected to be HKD 286.25 billion, HKD 303.21 billion, and HKD 306.75 billion respectively, with year-on-year growth rates of 27.94%, 5.93%, and 1.17% [2] - Net profit forecasts for the same years are HKD 179.02 billion, HKD 194.44 billion, and HKD 198.57 billion, reflecting year-on-year growth rates of 40.88%, 8.62%, and 2.13% [2] Group 3: Supporting Factors - The Federal Reserve's shift in monetary policy, including interest rate cuts, is expected to enhance liquidity in emerging markets, providing support for the Hong Kong stock market [2] - Southbound funds have seen a net inflow exceeding HKD 1 trillion since the beginning of 2025, driven by the low valuation of Hong Kong stocks and liquidity spillover from the A-share market [3] - The valuation of the Hang Seng Index remains attractive, with a PE-TTM of approximately 11.95x, which is at the 64% percentile over the past 20 years, highlighting the "valuation pit" effect of Hong Kong stocks compared to the CSI 300's 14.24x [3]

Core Viewpoint - The Hong Kong stock market experienced a correction on October 3 after several days of significant gains, with the Hang Seng Index and Hang Seng Tech Index both declining. However, analysts suggest that the upward trend in the market is not over, and there are opportunities for undervalued stocks to rebound, particularly in the tech sector [1][2]. Group 1: Market Performance - The Hang Seng Index closed down 0.54% and the Hang Seng Tech Index down 0.90% on October 3 [1]. - Automotive stocks in Hong Kong saw collective declines, with BYD shares dropping nearly 4% and "NIO, Xpeng, and Li Auto" each falling over 2% [1]. - Alibaba's stock rose against the trend, reaching a nearly four-year high with a closing increase of 1.09%, having gained nearly 60% since the end of August [1]. Group 2: Investment Trends - Alibaba has become the most favored stock among southbound funds, with a net buy amount of approximately 757.09 billion HKD over 26 consecutive trading days, significantly outpacing Tencent's 73.73 billion HKD [1]. - Major international institutional investors, sovereign funds, and hedge funds in the tech sector have been investing in Alibaba since the beginning of 2024, alongside notable investors like Duan Yongping increasing their holdings [1]. Group 3: Analyst Predictions - Morgan Stanley raised Alibaba's target price in the Hong Kong market by nearly 45%, predicting a price of 240 HKD per share by the end of 2026, indicating about 30% upside potential from the closing price on October 3 [2]. - Cathie Wood's Ark Investment Management also increased its holdings in Alibaba and Baidu stocks this week [2]. Group 4: Market Sentiment - The current market sentiment is bolstered by continuous policy support and an influx of southbound capital into the Hong Kong market, with expectations of improved liquidity conditions due to the onset of a Federal Reserve rate cut cycle [1]. - Historical trends suggest that October typically sees significant positive performance in the Hong Kong market, indicating a potential "red October" [1].

Group 1: Macroeconomic Overview - The Hong Kong Monetary Authority (HKMA) followed the Federal Reserve's rate cut on September 18, reducing the base rate by 25 basis points to 4.5%, indicating potential further declines in interest rates due to the Fed's ongoing easing policy [4][12]. - The Hong Kong dollar (HKD) appreciated slightly against the US dollar, with the exchange rate at 7.7839 on September 29, compared to 7.7963 at the end of August, reflecting a stable banking system surplus of HKD 54.2 billion [13]. Group 2: Stock Market Performance - The Hang Seng Index rose by 6.16% over the past month, with the Hang Seng Technology Index increasing by 11.45% and the Hang Seng China Enterprises Index up by 5.66% [5][15]. - The average price-to-earnings (P/E) ratio of the Hang Seng Index reached 12.06 times, placing it in the 79.7% percentile of the past decade, while the average price-to-book (P/B) ratio was 1.23 times, in the 83.6% percentile [19][21]. Group 3: Sector Analysis - The materials sector saw the highest increase, with an 18.4% rise, followed by non-essential consumer goods at 17.8%, while telecommunications experienced the largest decline [15][17]. - Notable performers in the sub-sectors included other metals and minerals, food additives, and online retailers, which rose by 39.9%, 31.5%, and 31.2% respectively [17]. Group 4: Capital Flows - Southbound capital inflows reached over HKD 160 billion in September, marking a four-year monthly high, with total inflows for the year surpassing HKD 1 trillion for the first time [25][27]. - The sectors attracting the most inflows included non-essential consumer goods, healthcare, and information technology [27].

Group 1 - The Hong Kong stock market indices collectively declined on September 26, with technology stocks experiencing significant drops while wind power stocks strengthened [1] - Xiaomi's new smartphone series, the Xiaomi 17, was launched with starting prices of 4499 yuan for the base model and up to 5999 yuan for the ProMax version, featuring the fifth-generation Snapdragon 8 chip [1] - Xiaomi's CEO Lei Jun emphasized the importance of self-developed chips for the company's success, committing to invest at least 50 billion yuan over the next decade [1] Group 2 - Alibaba's stock price has doubled this year, making it the largest weighted stock in the Hang Seng Tech Index at 9.17% [2] - The market outlook is optimistic due to potential interest rate cuts by the Federal Reserve and continued inflow of southbound capital, which may lead to a revaluation of the Hang Seng Tech Index [2] - Investors without access to Hong Kong Stock Connect accounts can consider the Hang Seng Tech Index ETF (513180) to gain exposure to core AI assets in China [2]