Group 1: A-Share Market Overview - The A-share market faced overall pressure this week, with major indices declining, including the CSI 500, CSI 2000, and Northbound 50, which fell by 5.82%, 5.70%, and 5.76% respectively[7] - The ChiNext index showed relative resilience, with a cumulative increase of 1.26% this week[7] - Average daily trading volume was 2.21 trillion yuan, down 11.51% week-on-week[7] Group 2: Market Analysis and Influencing Factors - The market's performance was influenced by multiple factors, including hawkish signals from the Federal Reserve, which exerted liquidity pressure on A-shares[7] - Ongoing geopolitical tensions in the Middle East led to a rapid increase in oil prices, impacting liquidity and causing significant declines in precious metals and non-ferrous metals[7] - The steel, non-ferrous metals, and basic chemicals sectors experienced substantial declines this week[7] Group 3: Future Outlook - The outlook suggests a potential long-term trend in the US-Iran conflict, with short-term trading in the oil and petrochemical sectors becoming crowded and less attractive[7] - There is a focus on the long-term demand for alternative energy sources and opportunities in sectors like engineering machinery due to global manufacturing expansion[7] Group 4: Hong Kong Market Overview - The Hong Kong market experienced a slight adjustment, with the Hang Seng Index down 0.74%, the Hang Seng Tech Index down 2.12%, and the Hang Seng China Enterprises Index down 1.12%[8] - Defensive sectors such as financials and comprehensive enterprises showed gains of 2.23% and 1.78% respectively, while materials and information technology sectors saw declines of 11.26% and 5.02%[8] Group 5: Investment Strategy - The recommendation for the Hong Kong market is to adopt a "barbell strategy," allocating to high-dividend defensive assets (energy, telecommunications, public utilities) while also considering internet leaders with significant valuation corrections for potential recovery[8] - The Hang Seng Tech Index is noted to have a high valuation attractiveness, indicating potential for mid-to-long-term investment[8] Group 6: Risk Factors - Risks include potential tightening of global liquidity beyond expectations, increased complexity in market dynamics, and unpredictable policy changes[9]

Core Viewpoint - The report from China Galaxy Securities indicates that despite global non-US assets being under pressure, Hong Kong stocks rose by 1.45% on March 16, suggesting a search for "safe havens" as funds reallocate within non-US assets [1][2]. Group 1: Market Dynamics - The ongoing US-Iran conflict is causing significant shocks to global markets, with potential long-term implications for energy prices and inflation, leading to a scenario of low growth, high interest rates, and persistent inflation [1]. - The synchronized tightening of global monetary conditions is further compressing policy space for various countries, leading to a stronger US dollar and pressure on non-US currencies, which in turn affects equity valuations [2]. Group 2: Capital Flows - From February 27 to March 13, international intermediaries reduced their holdings in Hong Kong stocks by approximately 700 billion HKD, reflecting a phase of withdrawal by international funds, particularly from Europe and the US, due to global risk aversion [3]. - Despite the net selling of 11.01 million HKD by southbound funds on March 16, the Hang Seng Index still showed strong performance, indicating that foreign capital was a significant driver of the rebound, possibly sourced from Middle Eastern markets seeking safe havens [4]. Group 3: Sector Analysis - The energy sector has emerged as a consensus among both foreign and domestic investors, while technology stocks, particularly those of internet giants like Tencent and Alibaba, have seen increased foreign investment due to attractive valuations following prior declines [5]. - The current market environment is characterized by a "Risk-off" trading mode, with global funds shifting from cyclical stocks to defensive assets in response to geopolitical risks and inflation concerns [5]. Group 4: Investment Outlook - The resilience of Hong Kong stocks is attributed to their low valuations, which attract risk-averse funds seeking certainty, with a notable valuation gap compared to other major markets [6]. - Looking ahead, the consumer discretionary sector is expected to show the strongest performance in terms of earnings growth and profitability, while the financial sector offers substantial safety margins [6].

Group 1 - The report highlights that global markets experienced a decline, with the Hang Seng Index dropping by 1.1% while the Hang Seng Technology Index increased by 0.6% during the week of March 9-13, 2026 [1][2] - The energy sector led the gains with a 6.2% increase, while the financial sector faced the largest decline at 4.4% [1][2] - The geopolitical tensions in the Middle East have led to a rise in oil prices, impacting the profitability of the technology sector and increasing market volatility [1][3] Group 2 - The report suggests that investors should remain cautious with their positions in the Hong Kong stock market, focusing on sectors related to energy, military, and renewable energy [3] - The report indicates that the "calculation power for all" policy supports the AI sector, while high oil prices enhance the defensive attributes of the lithium battery and energy storage industries [1][3] - The report notes that there is a significant net inflow of capital from mainland China into Hong Kong, particularly in the technology, healthcare, and non-essential consumer sectors [2][12] Group 3 - Upcoming key data and events include the NVIDIA GTC conference, China's retail sales data, and the U.S. Federal Reserve's interest rate decision [4][30] - The report emphasizes the importance of monitoring the earnings reports of major internet companies, which are expected to influence market sentiment [3][4] - The report also mentions that the IPO market in Hong Kong is showing signs of recovery, with a total of 47.8 billion HKD raised in the week [2][4]

Investment Rating - The report maintains a "Buy" rating for the company [5][51]. Core Views - As of March 9, 2026, the company's PE ratio is 29.06x, which is at the 12th percentile historically since 2016, indicating a certain level of value for allocation. It is expected that with the continuous enhancement of the mutual access policy in the Hong Kong capital market, liquidity in the Hong Kong stock market will continue to rise, leading to an increase in overall market activity and valuation. The company is projected to achieve revenue and other income of HKD 365 billion, 391 billion, and 413 billion for 2026, 2027, and 2028 respectively, with net profit attributable to shareholders of HKD 226 billion, 241 billion, and 256 billion, corresponding to PE valuations of 22.9x, 21.4x, and 20.2x respectively [2][51]. Summary by Sections Market Environment - The Hong Kong stock market remains active, with the overall trading volume at historical highs. In February, the average daily trading (ADT) for the Hong Kong Stock Exchange was HKD 2,468 billion, reflecting a month-on-month decrease of 9.4% and a year-on-year decrease of 17.0%. The Northbound trading ADT was HKD 3,807 billion, down 16.1% month-on-month but up 45.2% year-on-year, while Southbound trading ADT was HKD 1,142 billion, down 14.1% month-on-month and down 28.6% year-on-year [6][16]. Derivatives Market - In February, both futures and options trading volumes increased month-on-month. The average daily volume (ADV) for futures was 68.4 million contracts, up 3.8% month-on-month but down 25.5% year-on-year. The ADV for options was 105.0 million contracts, up 0.2% month-on-month but down 21.9% year-on-year [19][20]. Primary Market - The IPO scale in the Hong Kong stock market saw significant growth in February, with a total of 24 new stocks listed, raising a total of HKD 923 billion, which is a year-on-year increase of 1052.4%. The average size of each IPO was HKD 38.5 billion, up 332.2% year-on-year. Notably, 42% of the new listings were from the information technology sector, contributing 48% of the total fundraising [31][32]. Investment Income - As of the end of February, the relevant interest rates for investment income showed a general decline. The 6-month HIBOR was 2.73%, the 1-month HIBOR was 2.41%, and the overnight HIBOR was 2.55%, reflecting month-on-month changes of -0.16 percentage points, -0.20 percentage points, and +0.37 percentage points respectively [41].

Investment Rating - The report maintains a "Buy" rating for the company [2][6]. Core Insights - As of March 9, 2026, the company's PE ratio stands at 29.06x, which is in the 12th percentile historically since 2016, indicating a certain level of value for allocation. It is expected that with the continuous enhancement of the mutual access policy in the Hong Kong capital market, liquidity in the Hong Kong stock market will continue to rise, leading to an increase in overall market activity and valuation. The company is projected to achieve revenues and other income of HKD 365 billion, 391 billion, and 413 billion for 2026-2028, with net profit attributable to shareholders of HKD 226 billion, 241 billion, and 256 billion, corresponding to PE valuations of 22.9x, 21.4x, and 20.2x respectively [2][52]. Company Overview - The Hong Kong stock market experienced overall fluctuations in February, with the trading activity of listed securities on the Hong Kong Stock Exchange remaining high. The monthly average daily turnover (ADT) for February was HKD 2,468 billion, reflecting a decrease of 9.4% month-on-month and 17.0% year-on-year. However, the overall trading activity remains at historical highs [8][11][17]. Market Environment - The overall market trading remains high, and performance is expected to grow alongside market increases. The total market capitalization of Hong Kong stocks as of the end of February 2026 was HKD 498.76 billion, up 27.5% year-on-year, despite a month-on-month decrease of 1.8% [9][11]. Derivatives Market - In the derivatives market, both futures and options trading volumes increased month-on-month. The average daily volume (ADV) for futures was 68.4 million contracts, up 3.8% month-on-month but down 25.5% year-on-year. The ADV for options was 105.0 million contracts, showing a slight increase of 0.2% month-on-month but a decrease of 21.9% year-on-year [21][22]. Primary Market - The IPO scale in the Hong Kong stock market saw significant growth in February, with a total of 24 new stocks listed, raising a total of HKD 923 billion, which is a year-on-year increase of 1052.4%. The average scale of each IPO was HKD 38.5 billion, up 332.2% year-on-year [31][32].

- The report constructs a prediction model for the periodic adjustment of Hong Kong Stock Connect constituent stocks based on the inclusion and exclusion rules of the index. The model uses historical data from 2016 H2 to 2025 H1, covering 18 adjustment periods, to analyze the market effects of inclusion and exclusion events[3][19][41] - The inclusion effect shows that stocks added to the index typically achieve significant excess returns from the announcement date to the effective date, with an average cumulative return of 5.45% during this window. Conversely, excluded stocks exhibit negative returns, with an average cumulative return of -9.58% during the same period[3][19][40] - The prediction model demonstrates high recall rates for inclusion predictions and high precision rates for exclusion predictions. For example, in the June 2025 adjustment, the inclusion prediction achieved a recall rate of 1.00 and a precision rate of 0.83, while the exclusion prediction achieved a precision rate of 0.92 and a recall rate of 0.60[41][43] - The inclusion effect is characterized by short-term trading opportunities, with excess returns peaking shortly after the effective date and then declining. The exclusion effect, on the other hand, shows a more consistent and predictable downward trend, making it a more reliable signal for event-driven strategies[19][27][39] - The model's prediction results for March 2026 indicate that the predicted inclusion stocks have an average daily market capitalization exceeding HKD 90 billion, with a focus on the healthcare and information technology sectors. Predicted exclusion stocks, however, have a lower average market capitalization, mostly ranging between HKD 30 billion and HKD 55 billion, and are concentrated in non-essential consumption and traditional industries[43][44][47]

Group 1 - The report indicates that the Hong Kong stock market is currently in a consolidation phase, with short-term focus on sectors such as oil and gas, non-ferrous metals, and military industries due to geopolitical tensions [3] - The Hang Seng Technology Index has been under pressure, leading to a decline in investor confidence, particularly as concerns about AI persist and the recent Nvidia earnings report failed to boost the tech sector [3][4] - The report highlights a significant inflow of funds into ETFs targeting the Hong Kong market, with a total scale reaching 444.26 billion, an increase of 13.64 billion, indicating a growing interest in TMT, technology, and manufacturing sectors [2][4] Group 2 - The report notes that the market is awaiting the outcomes of the "Two Sessions," with expectations that policies will continue to focus on supply-side reforms, particularly in technology and infrastructure investments [3] - The report emphasizes that the performance of the Hong Kong stock market is sensitive to geopolitical risks, particularly the ongoing US-Iran conflict, which may affect oil prices and inflation expectations [3] - The report mentions that the net inflow of southbound funds has slowed, with the proportion of Hong Kong stock trading volume decreasing to 32% this week, indicating a cautious market sentiment [1][9]

Core Viewpoint - In February, southbound capital inflow into Hong Kong stocks reached approximately 90.575 billion HKD, marking a three-month high despite a volatile market, indicating strong investor interest in certain sectors [2][4]. Group 1: Capital Inflow Data - Southbound capital recorded a net inflow of about 90.575 billion HKD in February, with an average daily inflow of 6.469 billion HKD, a nearly 90% increase compared to January [2]. - There were five trading days where the net buying exceeded 10 billion HKD, setting new records [4]. - The technology sector attracted the most capital, with a net inflow of 39.372 billion HKD, while the non-essential consumer sector saw 21.196 billion HKD [5][6]. Group 2: Sector Performance - The technology sector has seen a cumulative inflow of over 66 billion HKD in the first two months of the year, despite the Hang Seng Technology Index declining nearly 7% [6]. - Non-essential consumer goods also received significant attention, with a total inflow exceeding 38 billion HKD in the first two months [6]. - The materials sector, particularly non-ferrous resources, faced continuous selling pressure, with a cumulative outflow of nearly 20 billion HKD over the past two months [6]. Group 3: Individual Stock Performance - Tencent Holdings (0700.HK) was the top net buyer with 24.453 billion HKD, followed by Xiaomi Group (1810.HK) with 7.337 billion HKD and Alibaba (9988.HK) with 3.473 billion HKD [7][9]. - Conversely, Zijin Mining (2899.HK) experienced the largest net sell-off at 3.520 billion HKD, followed by SMIC (981.HK) at 2.867 billion HKD [8][9]. - Notable trends include continued inflows into Meituan (3690.HK) and Xiaomi Group despite their respective declines of 16.51% and 1.69% in February [9].

Core Viewpoint - The Hong Kong stock market has experienced fluctuations since the start of the Year of the Rabbit, with a notable performance in the technology sector, particularly in semiconductors, driven by AI advancements and upcoming earnings disclosures [1][2]. Market Performance - Since the market opened after the Lunar New Year (February 20-24), the Hang Seng Index has decreased by 0.43%, the Hang Seng China Enterprises Index by 0.69%, and the Hang Seng Technology Index by 1.80%. However, since January 2026, the Hang Seng Technology Index has dropped over 4%, while the other two indices have seen gains [1]. - Various sectors have shown positive performance, with telecommunications, energy, and industrial sectors leading with increases of 2.62%, 2.48%, and 2.43% respectively. Other sectors like materials, information technology, finance, and discretionary consumption have seen slight increases, while consumer staples, conglomerates, and healthcare have declined [1]. Individual Stock Performance - Nearly half of the stocks in the Hong Kong market have risen since the Lunar New Year, with notable gainers including Dachen Microline Group (over 100%), Jiuyuan Group, Putian Communication Group, and Yabo Technology Holdings (over 50%), and several others with gains exceeding 20% [2]. - Stocks with a market capitalization exceeding HKD 1 trillion have seen over 60% increase since the Lunar New Year, including China Petroleum (over 4%), China National Offshore Oil Corporation, Agricultural Bank of China, and Zijin Mining (over 1%) [2]. Semiconductor Sector Strength - On February 24, the Wind Hong Kong Semiconductor Index continued its upward trend, rising by 2.00% after an initial dip, with significant gains from stocks like Weizhi Holdings (13.79%), Zhaoyi Innovation (11.91%), and Puda Technology (10.91%) [2]. - The strength in the semiconductor sector is attributed to rising AI computing demands and breakthroughs in domestic equipment and components, leading to increased market confidence [2]. Future Outlook - Looking ahead to 2026, ongoing domestic industrial policies and measures to reduce competition are expected to improve manufacturing profitability and overall demand for upstream components and equipment [3]. - Analysts suggest three key areas for future investment: rising geopolitical risks leading to increased interest in precious metals and energy, low valuations in the consumer sector with potential for growth, and the technology sector as a long-term investment focus due to ongoing advancements in AI [3][4]. Technology Sector Insights - The technology sector has shown strong performance, with new AI model stocks like MINIMAX-WP and Zhiyu showing significant upward trends, while traditional internet giants have faced adjustments [4]. - Current valuations in the Hong Kong technology sector are at historical lows, indicating potential for future growth as AI development continues [4].

Core Viewpoint - The company has been selected by Hang Seng Indexes Company to be included in multiple indices, reflecting positive business performance and investment potential [1] Group 1: Index Inclusion - The company will be included in the Hang Seng Composite Index, Hang Seng Composite Industry Index - Information Technology, Hang Seng Composite Small Cap Index, Hang Seng Composite Small Cap Index, Hang Seng Information Technology Index (Investable), Hang Seng Hong Kong Stock Connect Information Technology Index, Hang Seng Hong Kong Stock Connect Software Theme Index, and Hang Seng Hong Kong Stock Connect Software and Semiconductor Index, effective from March 9, 2026 [1] Group 2: Market Recognition - The board believes that inclusion in these indices signifies market recognition of the company's positive business performance, investment value, and development potential [1] Group 3: Impact on Liquidity and Opportunities - The company anticipates an increase in public visibility and improved trading liquidity of H-shares, which may provide more business development and collaboration opportunities [1]