In the past week,$Hang Seng TECH Index (800700.HK)$Soared by 20.23%, Hang Seng composite,$Hang Seng Index (800000.HK)$The price increases are all above 13%. As a result, the trading volume of ETF products in the Hong Kong market also experienced a "soaring".

On September 27 alone, the total trading volume of all ETFs in Hong Kong reached 76.7 billion Hong Kong dollars, with $CSOP Hang Seng TECH Index ETF (03033.HK)$The turnover reached 10.5 billion Hong Kong dollars, the historical high since the listing four years ago in 2020. According to the Hong Kong Stock Connect's ETF holding data for the Hong Kong market, the holdings by the Stock Connect system since the beginning of this week$Hang Seng TECH Index ETF (03032.HK)$,$TRACKER FUND OF HONG KONG (02800.HK)$,$Hang Seng H-Share Index ETF (02828.HK)$,$iShares Hang Seng TECH ETF (03067.HK)$The market capitalization and shares of the products are also continuing to grow.

From recent public statements by domestic and foreign institutions, many institutions are bullish on the investment opportunities in the Hong Kong stock market. In their view, the better global liquidity in Hong Kong stocks may receive better denominator liquidity support, but the key lies in both the numerator and the expected profit growth.

ETF trading volume in the Hong Kong stock market 'takes off.'

Policy stimulus combined with the effect of interest rate cuts has led to a sustained rebound in the Hong Kong stock market. On September 27, the Hang Seng Index rose by 3.55%, surpassing the 20,000-point mark in one go, with a turnover of 445.7 billion Hong Kong dollars, exceeding the 360.7 billion Hong Kong dollars of three years ago, setting a new record for single-day turnover. According to LiveReport's big data statistics, since September 19, the daily average turnover of the Hang Seng Index has exceeded 200 billion Hong Kong dollars, doubling compared to the first half of the year.

On the same day, the turnover of all ETFs in Hong Kong reached 76.7 billion Hong Kong dollars. Wang Yi, Director of the Quantitative Investment Department of Southern Dongying, told Financial Union reporters that whether it is Hong Kong stocks or A-shares, the policy feedback in recent days has been very strong, and he has also seen more overseas investors paying attention to this round of policy changes.

Data shows that as of September 27, the turnover of ETF products under Southern Dongying reached 21.6 billion Hong Kong dollars, accounting for as high as 28% in the Hong Kong market. Among them, the turnover of Southern Hang Seng Tech reached 10.5 billion Hong Kong dollars, a historical high in the four years since its listing in 2020.

According to the data on the trading of the ETF, the cumulative buy and sell volume of the southbound funds in the first four days of this week reached 10.793 billion yuan, with buy and sell totals exceeding 4.6 billion yuan on both September 23 and September 24, maintaining an overall upward trend.

As of September 26, the Hong Kong Stock Connect system holds 59.8736 million shares of the Hang Seng Tech ETF, with a market value of 0.211 billion yuan, an increase of 32.8248 million shares since September 23 (this Monday), and the market value also increased by 0.121 billion yuan.

During the same period, the Hong Kong Stock Connect held 0.101 billion units of the Tracker Fund of Hong Kong, with a market value of 1.808 billion yuan, an increase of 20.39 million units since September 23, and the market value increased by 0.429 billion yuan. In addition, this week, the Hong Kong Stock Connect holdings of Hang Seng China Enterprises, iShares Hang Seng Tech, and other products have all experienced varying degrees of growth.$Global X Hang Seng High Dividend Yield ETF (03110.HK)$,$ChinaAMC Hang Seng Hong Kong Biotech Index ETF (03069.HK)$Among other things, there has been growth in the holdings of different products by the Hong Kong Stock Connect.

Many domestic Hong Kong Stock Connect ETFs have shown a significant increase in attracting investments this week. The CSOP Hang Seng HK Securities Investment Theme ETF has accumulated a trading volume of 12.753 billion yuan this week, with a growth of 0.613 billion yuan in the first four days; the China Merchants SSE HK Equities ETF has seen a cumulative trading volume of 7.231 billion yuan this week, with a substantial growth of 1.813 billion yuan in the first four days. The Invesco Hang Seng Stock Connect Tech ETF and the Huaxia SSE Heng Seng ETF have both had a scale increase of over 0.35 billion yuan in the first four days.

It is worth mentioning that the Hong Kong Securities and Futures Commission (SFC) latest 'Securities Industry Financial Review' report released on September 25 shows a further increase in the total net profit of the Hong Kong securities industry in the first half of 2024, with average daily market turnover and the number of active cash and margin customers both on the rise.

The report shows that the average daily turnover of the Hong Kong Exchange in the first half of 2024 was 110.4 billion yuan, an increase of 17% compared to the previous period. The total net profit of all participants in the Hong Kong Exchange was 10.2 billion yuan, an increase of 68% compared to the previous period.

Institutions at home and abroad are bullish on the Hong Kong stock market.

From the recent public statements of domestic and foreign institutional investors, many institutions are optimistic about the investment opportunities in the Hong Kong stock market.

Morgan Stanley stated that with the recent rate cut by the Federal Reserve, the liquidity in the Hong Kong market may have greater resilience to upward movements.

Given the stronger profit revision trend, more attractive absolute valuations and A/H premiums, more supportive southbound fund flows, and higher sensitivity to Federal Reserve actions during the rate-cutting cycle, Goldman Sachs' research department is more bullish on Hong Kong stocks.

"With the Federal Reserve entering a rate-cutting cycle, and China promptly launching a series of major monetary policy support measures, it is expected that Hong Kong stocks will benefit from improved liquidity at home and abroad, as well as global capital rebalancing, ushering in a phase of growth." Bocom International said that subsequent fiscal stimuli to boost domestic demand will help improve domestic demand, and the molecular end is also expected to see positive improvements, with Hong Kong stocks poised for a rebound.

Hang Seng Qianhai Fund Manager Xing Cheng pointed out that Hong Kong stocks are more sensitive to external liquidity, and a shift in U.S. monetary policy may provide some support to the denominator of the valuation of the Hong Kong stock market in stages. At the same time, Hong Kong stocks are the 'first stop' for overseas funds to allocate Chinese assets, and the change in policy expectations has increased foreign risk appetite and investment willingness. In addition, long-term undervaluation boosts the rebound significantly. 'At present, both liquidity and fundamentals have shown clear marginal improvements, providing strong support for the valuation repair of Hong Kong stocks.'

Xing Cheng believes that the moderate recovery of the Chinese economy and the major trend of the U.S. Federal Reserve's shift in monetary policy are relatively certain, and the current low valuation levels and potential economic policy measures are expected to provide sustained support for the Hong Kong stock market. Low valuation levels will not only provide a buffer for the market against external fluctuations but are also expected to make the Hong Kong stock market more sensitive to growth recovery and policy signals, thus providing greater resilience. He suggests focusing on a balanced strategy in the future, i.e., on one hand, focusing on opportunities in interest-rate-sensitive industries in the growth track, such as internet, electric vehicles, technology hardware, and biomedical industries with longer durations, and on the other hand, focusing on high dividend yield targets with more certain shareholder returns.

In the view of CEB FUND, from China's perspective, the Federal Reserve's interest rate cut cycle will reduce monetary constraints and significantly increase monetary policy autonomy, which will be a very important step for China's macroeconomic policy. In terms of risk assets, the better global liquidity in Hong Kong stocks may receive better denominator liquidity support, but the key still lies in the numerator and profit growth expectations.

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