Market Performance - Alibaba-W led the rebound with a nearly 5% increase, followed by Kuaishou-W and Bilibili-W with over 4% gains, and Meituan-W with over 3% [1] - The Hong Kong Internet ETF (513770) rose by 2.25%, with a trading volume exceeding 160 million yuan within the first half hour of trading [2][3] Industry Insights - The Hong Kong Internet ETF tracks the CSI Hong Kong Internet Index, with Alibaba-W, Tencent Holdings, and Xiaomi Group-W being the top three holdings, accounting for 18.92%, 15.60%, and 11.54% of the total weight, respectively [4][5] - The index has shown significant resilience this year, outperforming the Hang Seng Technology Index, with a year-to-date increase of 55.11% compared to 45.79% for the Hang Seng Technology Index [6] Economic Context - Recent video calls between U.S. and Chinese trade leaders have eased market tensions, with expectations for further trade negotiations [3] - The Federal Reserve Chairman Jerome Powell hinted at a potential 25 basis point rate cut in the upcoming meeting, which could encourage foreign capital inflow into Hong Kong stocks [3][4] Valuation Metrics - The current price-to-earnings (P/E) ratio of the CSI Hong Kong Internet Index is 26.69, which is lower than the historical average and significantly better than U.S. and A-share technology sectors [6] - The index's performance over the past five years has varied, with notable fluctuations, including a 109.31% increase in 2020 and a 36.61% decrease in 2021 [8]

- The report highlights the performance of the index enhancement portfolios, where the CSI 500 enhancement portfolio outperformed the benchmark by 1.19% this week, while the CSI 300 enhancement portfolio underperformed the benchmark by 0.52% [2][46][52] - The CSI 500 enhancement portfolio has achieved a cumulative excess return of 53.08% relative to the CSI 500 index since 2020, with a maximum drawdown of -5.73% [46] - The CSI 300 enhancement portfolio has achieved a cumulative excess return of 37.09% relative to the CSI 300 index since 2020, with a maximum drawdown of -5.86% [52] - The report identifies momentum factor as the dominant style factor this week, delivering high excess returns, while beta factor showed significant negative excess returns. High-leverage stocks performed well, whereas residual volatility and non-linear size factors underperformed [2][57][56] - The report mentions the construction of the A-share sentiment index, which is based on market volatility and trading volume changes. The sentiment index includes bottom warning and top warning signals. Currently, the bottom signal indicates bearish sentiment, and the top signal also points to bearish sentiment [32][37][35] - The A-share prosperity index was constructed using the YoY growth of net profit attributable to the parent company of the Shanghai Composite Index as the Nowcasting target. As of October 17, 2025, the index stands at 21.71, up 16.28 compared to the end of 2023, indicating an upward cycle [29][30][31]

Group 1 - Federal Reserve Chairman Jerome Powell's speech on October 14 indicated a potential end to the balance sheet reduction in the coming months, supporting investor expectations for another rate cut this month [2][3] - Powell noted a deterioration in the labor market, with evidence showing low levels of layoffs and hiring, which further bolstered the outlook for a rate cut [3] - The Hong Kong stock market has seen significant activity this year, particularly in sectors like innovative pharmaceuticals, renewable energy, and technology, with the Hong Kong Technology ETF (513020) rising over 50% year-to-date [2][3] Group 2 - The Hong Kong Technology ETF (513020) tracks the CSI Hong Kong Stock Connect Index, including major stocks like Alibaba, Tencent, and BYD, making it a quality investment option for exposure to the Hong Kong market [4] - The top ten constituents of the Hong Kong Technology ETF include Alibaba (11.93%), Tencent (10.79%), and Xiaomi (8.08%), among others, indicating a diverse portfolio in the technology sector [5] Group 3 - The Hong Kong Technology Connect Index has outperformed the Hang Seng Technology Index and the Hong Kong Internet Index, with a cumulative increase of 76.06% since 2018, compared to 7.18% and 16.50% for the latter two indices [6] - The expectation of continued rate cuts by the Federal Reserve may enhance the attractiveness of Hong Kong technology stocks, as lower interest rates typically boost the valuation of growth sectors [8]

Market Liquidity Overview - R007 decreased from 1.6118% to 1.4850%, a reduction of 12.68 basis points; DR007 fell from 1.4376% to 1.4229%, down by 1.47 basis points. The spread between R007 and DR007 narrowed by 11.21 basis points [9][13] - The net inflow of funds this week was 41.556 billion yuan, an increase of 67.826 billion yuan compared to last week. Fund supply was 85.419 billion yuan, while demand was 43.863 billion yuan. Specifically, fund supply increased by 66.981 billion yuan, with net financing purchases rising by 76.935 billion yuan [13][16] Industry Sector Liquidity Tracking - Most sectors in the CITIC first-level industry index rose this week, with the non-ferrous metals sector showing the strongest performance, gaining 4.35%. Coal and steel sectors also saw slight increases. In contrast, the media and consumer services sectors led the declines, falling by 3.58% and 2.81%, respectively [18][21] - The electronic industry received the most net leveraged funds, totaling 7.780 billion yuan, while the coal industry experienced a net outflow of 0.38 billion yuan, marking the most significant reduction [21][22] Style Sector Liquidity Tracking - The stable style index had the highest increase at 2.58%, while the growth style index saw the largest decline at 1.78%. The growth style remains the most active sector, accounting for 59.89% of the average daily trading volume [3][11]

Core Viewpoint - Southbound capital inflow into Hong Kong stocks has accelerated, with a cumulative net inflow of HKD 395.2 billion in Q3, an increase compared to Q2 [1][2] Flow Perspective - In Q3, southbound funds continued to flow into Hong Kong stocks, with a cumulative net inflow of HKD 395.2 billion, which is an increase from Q2 [2] - The outflow of foreign capital has slowed down, with a cumulative net outflow of HKD 66.4 billion in Q3, marking a decrease in outflow for three consecutive quarters [2] - The proportion of southbound holdings in Hong Kong stocks has reached a new high, with the Hong Kong Stock Connect holding amount rising from 20.7% at the end of Q2 to 21.8% at the end of Q3 [2] Industry Perspective - In Q3, the main inflows from southbound funds were into consumer discretionary, non-bank financials, and pharmaceuticals, while software and hardware saw net outflows in Q2 [3] - Foreign capital dominates most sub-sectors in Hong Kong stocks, particularly in the internet, finance, and most consumer sectors [3] - Southbound funds have gained significant pricing power in sectors such as semiconductors, general consumption, and general dividends over the past two years [3]

Group 1 - The Hong Kong stock market opened high but experienced a decline, with the Hong Kong Internet Index falling by 0.62%, reflecting a broader market pullback [1] - Major tech stocks such as Alibaba, Meituan, and Kuaishou saw declines, while Tencent experienced a slight drop of 0.22%. Xiaomi and Bilibili managed to rise slightly [1] - The Hong Kong Internet ETF (513770) saw a nearly 2% drop, indicating active buying interest despite high premiums, with a real-time premium rate of nearly 0.5% [1] Group 2 - Alibaba has established a "Robot and Embodied AI Group," marking its strategic expansion from AI software to hardware applications, aiming to capture a share in the growing embodied AI market [3] - Alibaba Cloud led a $140 million financing round for the robotics startup X Square Robot, indicating strong investment in AI infrastructure [3] - International institutions have renewed their focus on Chinese tech assets, with significant price target increases for Alibaba and Tencent, highlighting their advancements in AI capabilities [3] Group 3 - The Hong Kong Internet ETF tracks the CSI Hong Kong Internet Index, with Alibaba, Tencent, and Xiaomi being the top three holdings, accounting for over 73% of the index [4] - The index has shown significant resilience, outperforming the Hang Seng Tech Index, with a year-to-date increase of 55.11% compared to 45.79% for the Hang Seng Tech Index [6] - The current price-to-earnings (P/E) ratio of the CSI Hong Kong Internet Index is 26.69, which is lower than both the US and A-share tech sectors, indicating potential value [6] Group 4 - The Hong Kong Internet ETF has surpassed 11.7 billion yuan in size, achieving a historical high, with an average daily trading volume exceeding 600 million yuan [8] - The index has shown varied performance over the past five years, with a notable increase of 23.04% in 2024, following declines in previous years [8]

Core Insights - The Hong Kong IPO market has experienced significant growth in the first three quarters of 2025, leading globally with 68 new listings and total fundraising of HKD 182.45 billion, representing a 51% and 227% increase year-on-year, respectively [1][4] - The market has seen a high level of oversubscription, with 98% of new stocks being oversubscribed and 86% having oversubscription multiples exceeding 20 times, doubling from the previous year [1][4] - The decline in the first-day drop rate to 24% marks a nine-year low, with an average first-day return of 28%, significantly up from 10.82% in the previous year [6][7] Market Activity - A total of 15 new stocks had oversubscription multiples exceeding 1,000 times, accounting for nearly 23% of the new listings, with the highest being Daheng Technology at 7,558.40 times [2][3] - The pharmaceutical and durable consumer goods sectors have been particularly favored, with several biotech companies achieving high oversubscription rates, indicating strong investor interest in innovative drug companies [2][3] Regulatory Environment - The recent surge in market activity is attributed to a healthier growth environment following regulatory changes that ended the era of high-leverage IPO subscriptions, with the Hong Kong Securities and Futures Commission implementing measures to curb excessive leverage [4][5] - The previous year saw only 2 new stocks with oversubscription multiples exceeding 1,000 times, highlighting the shift in market dynamics post-regulation [4][5] Investment Returns - The significant increase in first-day returns and the reduction in the drop rate have contributed to a more favorable investment environment, attracting more investors to the IPO market [6][7] - The performance of large new listings, such as NIO's H-shares, which saw a first-day increase of 16% and a cumulative rise of over 87% by September 30, has further enhanced the appeal of IPO investments [6][7] Market Drivers - The robust performance of the Hong Kong IPO market is driven by a combination of policy incentives, ample liquidity, and an evolving industrial landscape, with the medical and pharmaceutical sectors leading in new listings [7][8] - The Hong Kong Stock Exchange has received 348 listing applications as of October 5, 2025, indicating strong interest from companies, particularly in the technology and consumer sectors [7][8]

Core Viewpoint - The Hang Seng Index experienced a slight decline of 0.1% from October 1 to October 8, while the Hang Seng Tech Index saw an increase of 0.75% [1] Industry Performance - The steel, non-ferrous metals, and pharmaceutical sectors led the market, while the agriculture, forestry, animal husbandry, fishery, real estate, and consumer services sectors lagged [1] Market Trends - Post-holiday, Hong Kong stocks typically face a brief increase in volatility risk [1] - Despite external events and data during the holiday, the mid-term market logic remains unchanged and is further reinforced by several factors: 1. The rising importance of scarce and certain assets [1] 2. Increased demand for cross-asset and cross-regional capital reallocation [1] 3. A renewed emphasis on AI narratives [1] 4. Strong performance in experiential consumption [1]

Market Overview - The domestic equity market experienced high-level fluctuations last week, with the Wind All A Index rising by 0.25% and maintaining an average daily trading volume above 2 trillion yuan [1] - The Sci-Tech Innovation 50 Index reached a new high, increasing by 6.47% due to breakthroughs in domestic photolithography technology [1] - Sectors such as new energy, non-ferrous metals, and electronics saw significant gains, while light industry manufacturing, commercial retail, and consumer services faced notable declines [1] Policy Insights - At a press conference on September 22, the CSRC Chairman Wu Qing highlighted the achievements of the capital market during the 14th Five-Year Plan period, emphasizing its role in accelerating technological innovation [1] - Over 90% of newly listed companies in recent years are technology-oriented or have high technological content, with the tech sector now accounting for over 25% of the A-share market capitalization, surpassing the combined market cap of banking, non-bank financials, and real estate [1] - The number of technology companies in the top 50 by market cap increased from 18 at the end of the 13th Five-Year Plan to 24 currently [1] - By the end of August, various long-term funds held approximately 21.4 trillion yuan of A-share circulating market value, a 32% increase compared to the end of the 13th Five-Year Plan [1] Fund Flow Analysis - As of September 25, the total share of stock funds increased by 79.6 billion to 3.52 trillion, while mixed fund shares decreased by 45 billion to 2.96 trillion [2] - The margin trading balance exceeded 2.4 trillion yuan, marking a historical high and a net increase of over 600 billion since June 20, contributing significantly to the current market rally [2] - The ongoing market rally, which began on September 24 last year, continues, with artificial intelligence and overseas expansion themes being the main drivers [2] Bond Market Trends - Last week, yields on government bonds continued to rise, with credit bond yields following suit [3] - The central bank's stance on maintaining liquidity support for the banking sector remains evident, which is expected to provide strong support for short- to medium-term bonds [3] - The "stock-bond seesaw" effect is expected to persist, necessitating attention to the sustainability of policy support for stock market sentiment [3]

Market Liquidity Overview - R007 increased from 1.5160% to 1.5538%, a rise of 3.78 basis points; DR007 rose from 1.5096% to 1.5313%, an increase of 2.17 basis points. The spread between R007 and DR007 widened by 1.61 basis points [9][13] - The net inflow of funds this week was 31.344 billion yuan, an increase of 81.749 billion yuan compared to last week. Fund supply was 104.51 billion yuan, while fund demand was 73.166 billion yuan. Specifically, fund supply decreased by 42.373 billion yuan, with net financing purchases down by 20.201 billion yuan and stock dividends down by 28.005 billion yuan [13][16] Industry Sector Liquidity Tracking - Most sectors in the CITIC first-level industry index declined, with a weak overall market style and a continued pattern of sector differentiation. The number of declining sectors exceeded that of rising sectors, with the electronic sector showing the most significant increase of 3.67% [18][20] - The consumer services and retail trade sectors led the declines, with decreases of 6.71% and 3.92%, respectively [18][20] Style Sector Liquidity Tracking - Growth style had the largest increase of 1.58%, while consumer style experienced the largest decline of 2.18%. Growth style accounted for 61.88% of the average daily trading volume, making it the most active sector [3][21] - The average turnover rate for growth style remained the highest at 3.37%, while financial and stable styles had relatively low turnover rates [3][21]