Group 1 - The core viewpoint of the article emphasizes the positive performance of the Hong Kong stock market in the first half of 2025, with significant gains across major indices, reflecting investor optimism and market vitality [2][5] - The Hang Seng High Dividend Yield Index has shown superior long-term returns, indicating a recognition of long-term value investing within the Hong Kong market [2][5] - Southbound funds are increasingly favoring high-quality stocks, with stable exposure to quality factors and marginal improvements in exposure to undervalued and high-dividend stocks over the past three years [2][18] Group 2 - The article discusses various active quantitative strategies in the Hong Kong stock market, including value, dividend, quality, and growth strategies, all of which have demonstrated effective stock selection capabilities [3][22] - The value strategy, focusing on risk resilience, has achieved an annualized return of 19.9% since 2012, while the Hong Kong Stock Connect value strategy has realized a 15.6% annualized return since 2016, outperforming the Hang Seng Stock Connect Index by 11.4% [3][42] - The dividend strategy has yielded an annualized return of 19.1% since 2012, with a 7.7% excess return, while the quality strategy has achieved a 16.2% annualized return since 2016, with a 12.3% excess return over the Hang Seng Stock Connect Index [3][42] Group 3 - The growth strategy has achieved a 17.1% annualized return since 2016, with a remarkable 47.2% return this year, showing stable excess returns compared to the Hang Seng Stock Connect Index [4][22] - The article highlights the high proportion of "penny stocks" in the Hong Kong market, which exceeds 50%, necessitating the exclusion of these stocks for effective stock selection [6][45] - The average market capitalization of stocks within the Stock Connect is significantly higher, with a median of approximately HKD 20 billion, compared to below HKD 10 billion for the overall market [6][45] Group 4 - The article presents the performance of various factors within the Stock Connect, noting that value, dividend, quality, and growth factors have shown strong stock selection capabilities, with an average IC of 3.30% for the ROE factor [15][16] - The quality factor has demonstrated stable performance, maintaining an advantage even during periods when growth factors were dominant [15][16] - The article also discusses the correlation between major factors, indicating a high correlation among factors such as net profit growth and operating profit growth [37][38] Group 5 - The value strategy is constructed based on a "PB-ROE" framework, focusing on undervalued stocks with strong risk resilience, achieving significant long-term excess returns [24][39] - The article emphasizes the importance of cash flow stability in avoiding "value traps" when selecting undervalued stocks [36][39] - The value strategy's holdings are predominantly in large-cap stocks, with a recent concentration in the healthcare sector [45][47]