Core Insights - The Hong Kong capital market is experiencing a strong recovery this year, driven by continuous inflow of southbound funds, the return of international investors, and a surge in listings of quality innovative companies [1] Group 1: Market Dynamics - Southbound funds have accumulated to approximately $129 billion this year, surpassing the total for the previous year, with an average daily trading volume exceeding $30 billion, nearly doubling year-on-year [1] - The valuation discount of H-shares relative to A-shares is narrowing, indicating a revaluation of Hong Kong stocks by the market [1] Group 2: Investment Trends - The trading volume of dual-listed companies in Hong Kong has risen to 36%, indicating a shift of funds from U.S. stocks back to Hong Kong stocks [1] - Investors are increasingly favoring direct investments in Hong Kong stocks to mitigate geopolitical risks and seize opportunities for the revaluation of Chinese assets [1] Group 3: International Investor Engagement - There has been a significant increase in foreign participation in new stock projects facilitated by Morgan Stanley, with strong interest from sovereign funds and long-term capital [1] - Many international investors believe that despite the recovery in valuations of leading Chinese companies, Hong Kong stocks still present numerous undervalued quality targets compared to U.S. stocks [1] Group 4: Structural Changes in the Market - The influx of southbound and foreign capital is leading to profound changes in the structure of the Hong Kong stock market, with a shift in funds from traditional financial and real estate sectors towards new economy sectors [1] - The investment logic of international investors is transitioning from "passive tracking" to "active exploration," with innovative companies that possess global competitiveness becoming core beneficiaries [1]