Market Overview - The Hong Kong stock market opened lower today, with the Hang Seng Index starting at 25,701.63 points, down 250.77 points, a decline of 0.97% [2] - The Hang Seng Tech Index opened at 5,716.54 points, down 101.75 points, a drop of 1.75% [2] - Analysts attribute the drop in the Hang Seng Index to a significant decline in US stocks the previous night, with the Dow Jones falling by 0.53% and the Nasdaq dropping over 2% [2] New Listings - The new energy vehicle company, Seres (09927.HK), began trading but faced immediate challenges, with its stock price falling nearly 10% to a low of 118 HKD from an issue price of 131.5 HKD [2] Sector Performance - Technology stocks experienced a collective decline, with Bilibili down over 5%, Kuaishou down over 3%, and Alibaba and Tencent both down over 2% [2] - Gold stocks continued to decline, with Zijin Mining International falling over 3% [2] - The lithium battery sector saw most stocks decline, with Ganfeng Lithium down over 4% [2] Future Outlook - CICC suggests that the active performance of Hong Kong stocks this year is closely related to liquidity, driven by two main forces: international funds seeking asset diversification amid a global "de-dollarization" narrative, and domestic funds looking for higher returns through southbound channels [2] - UBS commented on the recent adjustment of the gold value-added tax deduction policy, indicating that it aims to strengthen regulation on investment gold products, which may lead to decreased liquidity for these products and shift some investment demand towards gold ETFs [2]

Core Insights - The trend of international investors increasingly allocating to RMB assets is gaining momentum, with foreign institutions holding a significant portion of China's bond market [1][2][3] Group 1: Foreign Investment in Chinese Bonds - As of June 2023, the custody balance of foreign institutions in China's bond market reached 4.3 trillion yuan, accounting for 2.3% of the total custody balance [1] - The foreign holdings in the interbank bond market amounted to 4.2 trillion yuan, with government bonds making up 2.1 trillion yuan (49.6%) and interbank certificates of deposit at 1.2 trillion yuan (27.2%) [1] - UBS reported that from 2018 to 2022, foreign institutional holdings in Chinese bonds increased from 200 billion USD to 600 billion USD (approximately 4.3 trillion yuan), with a rebound expected starting in the second half of 2024 [2] Group 2: Market Accessibility and Trends - The opening of the China Interbank Bond Market (CIBM) in 2016 and the Bond Connect program in 2017 have significantly improved the accessibility for foreign investors [2][3] - A recent UBS survey indicated that central banks globally are increasing their holdings of RMB and euro assets, suggesting a favorable outlook for Chinese bonds over the next 3 to 4 years [2] Group 3: Future Investment Directions - Currently, interest in Chinese bonds is primarily in interest rate bonds, which constitute about 62.3% of the market, while credit bonds make up approximately 37.7% [4] - Foreign investors are expected to gradually diversify into credit bonds and asset-backed securities (ABS), as they begin to explore these options due to their attractive yield characteristics [4][5] - The RMB bond market is characterized by its large scale, high openness, low correlation, and low volatility, making it an appealing choice for foreign investors [5] Group 4: Panda Bonds and Market Dynamics - The issuance of Panda bonds has surged since June 2023, driven by the internationalization of the RMB and the diverse financing needs of foreign issuers and investors [6] - As of August 3, 2023, the issuance scale of Panda bonds in the interbank market reached 116.65 billion yuan, with foreign government agencies and multinational corporations being active participants [6] - The increasing importance and influence of the RMB in the international monetary system are key factors attracting foreign investment into the RMB bond market [6]