Core Insights - CITIC Securities suggests that the reasonable allocation of Hong Kong stocks in Chinese equity assets should be between 40% to 50, indicating significant room for institutional investors like domestic public funds to increase their holdings in Hong Kong stocks [1][3]. Group 1: Market Data - As of March 16, 2025, the market capitalization proportions of Hong Kong stocks in various indices are as follows: CSI Hong Kong-Shanghai-Shenzhen 300 at 48%, Hong Kong-Shanghai-Shenzhen 500 at 45%, and China Hong Kong-Shenzhen 300 at 49%. The MSCI China index shows an even higher proportion of 60% [3]. - The average allocation of Hong Kong stocks in domestic active equity public funds is only 25.5% as of the end of 2024, with Tencent Holdings being the only Hong Kong stock among the top ten holdings. This indicates a significant gap compared to the 50% investment limit for Hong Kong Stock Connect [3]. Group 2: Investment Trends - Following the 2025 Spring Festival, public funds have accelerated their increase in Hong Kong stock positions, alongside inflows from insurance asset management, private equity, and retail investors, leading to a net purchase of nearly 400 billion HKD in southbound funds within the year [3]. - The strength of Hong Kong stocks is attributed to two main advantages: the concentration of new economy core assets in sectors such as domestic computing power, internet, smart vehicles, and innovative pharmaceuticals, and the greater earnings recovery potential of leading Hong Kong companies compared to A-share core assets, where approximately 45% have not yet reached an operational turning point [3].