On June 14th, Northbound funds made a net purchase of HKD 5.807 billion in Hong Kong's stock market, of which HKD 3.051 billion was net purchase in the Hong Kong stock connect with Shanghai, and HKD 2.756 billion was net purchase in the Hong Kong stock connect with Shenzhen.
The most purchased stocks by Northbound funds are Tracker Fund of Hong Kong (2800), China Mobile (941) and Bank of China (3988); while the most sold stocks are HKEX (388), Tencent (700) and CGN Power (1816).
Active trading stocks for Hong Kong stock connect (Shanghai).
Active trading stocks for Hong Kong stock connect (Shenzhen).
Tracker Fund of Hong Kong (2800) received a net purchase of HKD 933 million. On the news front, Haitong Securities pointed out that the main reasons for the rise of Hong Kong stocks in May were the rebound of the expected rate cut of the US Federal Reserve, efforts in domestic real estate policies, and improvement in corporate profitability. In addition, the recent decline of the AH premium index and the surge in high dividend-paying assets in Hong Kong stocks are important reasons for the rapid decline of the AH premium index. The bank believes that the current valuation adjustment of Hong Kong stocks has been relatively sufficient, and the future rise depends on policy expectations and profit improvement.
China Mobile (941) received a net purchase of HKD 470 million. On the news front, Goldman Sachs posted a report indicating that they continue to have a positive view on the three major domestic telecom stocks, China Mobile, China Telecom, and China Unicom, in the second half of the year. The report also believes that the shares conform to the long-term value evaluation model based on a clear dividend rate target, stable business and profit growth combination, the ability to achieve more free cash flow than pure profit dividend targets from 2020 to 2026, as well as the company's willingness to promote shareholder return and management market value under state-owned enterprise performance indicators.
Bank of China (3988) received a net purchase of HKD 410 million. On the news front, CITIC Securities believes that the State Council will pay attention to the impact of the real estate sector on economic operation and financial stability, actively reserve new inventory to stabilize the market, and existing collection and delivery policies also have a positive effect on bank asset quality. Continuous introduction of real estate financial policies will change banks' expectations of real estate debt risk. With the recovery of risk expectations, the valuation of bank stocks will be more supported by fundamentals, and the space for dividend income of banks will be more certain.
CNOOC (883) received a net purchase of HKD 297 million. On the news front, HSBC Research issued a report indicating that China's oil giants continue to outperform, rising 10% to 50% from the beginning of the year, compared with a 7% rise in the Hang Seng Index over the same period, mainly due to rising oil prices and stable production growth. Against the background of the current state-owned enterprise reform, investors are seeking more resilient returns. HSBC maintains a positive view on oil stocks, as the current yield is still attractive to domestic investors at 6% to 7%, and strong cash flow may provide potential for further increases in dividends.
Meituan-Dianping (3690) received a net purchase of HKD 107 million. On the news front, Goldman Sachs believes that Meituan has announced that the board of directors has approved a repurchase of up to $2 billion of Class B ordinary shares on the open market, and the company has roughly completed the $1 billion repurchase announced in November last year. The new repurchase plan, which is equivalent to 2.3% of the market value, demonstrates the company's continued commitment to returning to shareholders. The bank said Meituan remains one of the major "buy" recommendations for China's internet in the second half of the year, based on strong earnings visibility and the potential market size of further online penetration and local services.
China Longyuan Power (916) received a net purchase of HKD 91.15 million. On the news front, Longyuan Power announced at the end of May that Mr. Gong Yufei resigned as general manager and Mr. Wang Liqiang succeeded him. Gong Yufei and Wang Liqiang had both served in different positions at main shareholder State Energy Group and Shenhua Group, respectively. The market seems to believe that this management change can promote the re-injection of renewable energy assets by the parent company. Previously, Deutsche Bank said that Longyuan Power will upgrade old wind power projects to small wind turbines. After the upgrade is completed, the internal rate of return of the wind power project is expected to increase by more than 1.5%.
Tencent (700) received a net sale of HKD 144 million. On the news front, Goldman Sachs noted that the performance of game stocks has significantly different from the beginning of this year due to different driving forces behind traditional and new games. The bank expects the mainland game market to maintain fierce competition for the rest of the year, especially in the summer, with more games to be launched and more aggressive promotions.
Hong Kong Exchanges and Clearing Limited (00388) suffered a net sell-off of HKD370 million. On the news front, UBS Group published a research report stating that the average daily turnover of Hong Kong Exchanges and Clearing in May increased by 38% and 25% year on year and month on month respectively to HKD140 billion, mainly driven by the improved market sentiment. The average daily turnover of southbound market increased by 99% year on year to HKD56 billion. The bank said whether the rebound in daily turnover can continue for the remainder of 2024 will depend on the performance of Hong Kong stocks and the implementation of policies, such as exemption of dividend tax for southbound investors.
In addition, Kuaishou Technology (01024) received net buy of HKD77.22 million. CGN Power (01816), China Resources Power (00836) and Semiconductor Manufacturing International Corporation (00981) suffered net sell-offs of HKD41.76 million, HKD38.74 million and HKD10.43 million respectively.