Group 1: Market Performance - The Hong Kong financial market showed a strong recovery in the first half of 2025, with multiple indicators reaching historical highs. The average daily trading amount on the Hong Kong Stock Exchange reached HKD 240.2 billion, a significant year-on-year increase of 118%, marking the highest level since 2010 [1] - The average daily trading amount of the Southbound Stock Connect reached HKD 110.96 billion, reflecting a year-on-year growth of 195%, indicating a notable increase in participation from mainland investors [1] - The derivatives market also performed well, with average daily trading volume of futures and options increasing by 11% year-on-year, and the average daily trading volume of RMB currency futures rising by 43%, highlighting the acceleration of RMB internationalization [1] Group 2: Market Capitalization and New Listings - As of June 30, 2025, the total market capitalization of Hong Kong reached HKD 42.7 trillion, a 33% increase compared to the same period last year, driven by the recovery of Chinese mainland economic conditions and the Hong Kong Stock Exchange's continuous optimization of listing regulations [2] - In the first half of 2025, the Hong Kong Stock Exchange received over 200 listing applications, with total new stock financing amounting to USD 14.1 billion, a year-on-year increase of 695%, significantly surpassing the global new stock financing growth of 8% [2] - It is expected that more than 80 medium to large enterprises will advance their plans for A-share or secondary listings in Hong Kong throughout the year [2] Group 3: Investment Outlook - The target price for the Hong Kong Stock Exchange has been raised to HKD 500.0, maintaining a buy rating based on strong fundamentals, including an average daily trading volume exceeding HKD 240 billion and record net inflows from Southbound funds [2] - The valuation corresponds to a price-to-earnings (PE) ratio of 42 times, reflecting a 15.8% increase from the previous trading day's closing price, with a safety margin as it remains below the historical bull market average of 44.7 times [2] - The Hong Kong stock market is currently undergoing a critical phase of valuation recovery and structural transformation, with significant long-term investment value despite potential short-term volatility due to policy expectations [2]

Core Viewpoint - QDII funds have shown remarkable performance in 2025, with the highest growth rate nearing 90%, driven by strong rebounds in the Hong Kong stock market, particularly in sectors like innovative pharmaceuticals, new consumption, and technology [1][2]. Summary by Sections QDII Fund Performance - As of June 26, 2025, the average net value growth rate of 312 equity QDII funds is 12.5%, with top performers primarily in innovative pharmaceuticals and biotechnology [3]. - The fund managed by Zhang Wei, Huatai-PB Hong Kong Advantage Selection A, leads with a net value growth rate of 89.15%, followed by several other funds with growth rates exceeding 54% [3]. Market Drivers - The strong performance of QDII funds in the first half of the year is attributed to the robust performance of the Chinese market, particularly the significant rise in stock prices of Hong Kong internet technology companies [4]. - The Chinese macroeconomic landscape shows signs of stabilization, with the technology sector experiencing a trend reversal, aided by breakthroughs in AI technology [4]. Investment Opportunities - Looking ahead to the second half of the year, there are significant investment opportunities in Hong Kong stocks, especially in internet, new consumption, and innovative pharmaceutical sectors [7]. - The Hong Kong stock market is seen as being in a value recovery phase, with many high-quality companies yet to be fully priced in [7]. Focus on Technology and Pharmaceuticals - The investment focus for the second half includes Hong Kong technology stocks, driven by the narrative of asset revaluation and the rise of the Chinese technology sector [8]. - The Hang Seng Technology Index is characterized by low valuations and high growth potential, with expectations of strong earnings growth for its constituent companies [8]. U.S. Market Outlook - There is a relatively optimistic outlook for the U.S. market, particularly in the technology sector, supported by favorable monetary and fiscal policies [9]. - Key factors include a clear shift in the monetary policy cycle, positive fiscal signals, and manageable risks in the U.S. bond market [9]. Additional Investment Areas - Key areas of focus for the second half include U.S. technology, gold, and regional opportunities in East Asia and Southeast Asia, driven by a weaker dollar and liquidity premiums [10].