October 3,$Hang Seng Index (800000.HK)$At one point, it fell 4%,$Hang Seng TECH Index (800700.HK)$The decline was 7%, and some brokerage firms and real estate stocks dived. However, the decline in Hong Kong stocks narrowed significantly in the afternoon, and the Hang Seng Index once leveled up and down. By the close, the Hang Seng Index closed down 1.47% and ended six consecutive gains, while the Hang Seng Technology Index fell 3.46%.

Regarding market fluctuations, a number of domestic private equity institutions said that there was no break during the holidays and that they are still closely following Hong Kong stock developments. I believe the Hong Kong stock bull market is not over. The market correction is a good thing for the long-term healthy development of the market. The wave of allocation has only just begun, and it is expected that capital will continue to pour into the Hong Kong stock and A-share markets later.

Private equity institutions closely track Hong Kong stocks during the holidays

“During the National Day holiday, we continued to track Hong Kong stocks and observe the continued inflow of foreign capital.” The person in charge of Zhishun Investment, a well-known private equity agency in Beijing, said that before the National Day, the company continued to buy A-shares and Hong Kong shares in both directions, “like fighting a war.” At the same time, expectations are positive for the opening of the market after the holiday season, focusing on the direct direction and implementation of the policy. To sum it up in a nutshell, it is possible to establish a bullish trend.

The above sources said that we are positive and optimistic. The current market situation is based on the economic situation, package policy layout, and the major reversal that the market has been looking forward to for a long time. It is also a rare opportunity, so we must seize the moment. Judging from the rhythm, the policy will basically exceed expectations, act as a wave of emotions first, and then look at the trend of fundamentals.

Not only is Zhishun Investment, but more private equity firms are also nervous and excited to closely follow market trends during this National Day holiday. The Hong Kong stock and Chinese securities markets have all become key areas of focus for private equity managers this holiday season, and capital inflows from all sides are obvious.

In the US stock market, ETFs that track Chinese assets performed particularly well. October 2nd, US time$Direxion Daily FTSE China Bull 3X Shares ETF (YINN.US)$increased by 21.81%,$Direxion Daily CSI 300 China A Share Bull 2X Shares (CHAU.US)$Up 15.23%. Tuesday local time, $KraneShares CSI China Internet ETF (KWEB.US)$ It ushered in a capital inflow of 0.7 billion US dollars, making it the largest single day inflow.

Goldman Sachs's latest report said that prior to the recent rise, hedge funds invested less than 7% in Chinese stocks, the lowest level in five years, but earlier this week, they changed direction and poured into the Chinese stock market one after another. Recently, they recorded the largest single-day purchase volume since March 2021, and the second largest single-day net purchase volume in the past 10 years.

In response to the recent surge in the Chinese market, Ray Dalio (Ray Dalio), a famous investor and founder of Bridgewater Fund, posted on Monday that the latest series of policy shifts are an important step in stimulating creative productivity. Considering that Chinese assets are still very cheap, a large number of investors have gone to the bottom of the market.

The wave of configurations has only just begun

The trend of a new round of reallocation of domestic wealth into the stock market has only just begun, and both A-shares and Hong Kong stocks are expected to benefit. According to statistics from Choice Financial Terminal, due to the stronger rise in A-shares, there was a net southbound capital inflow of 2.202 billion yuan from September 23 to 27, with net sales on Tuesday, Wednesday, and Friday.

Only on September 30 did market capital flow faster into the Hong Kong stock market. On that day, the net purchase scale of southbound capital reached 12.1 billion yuan, setting a new phased high. According to the closing data for the day, ETF transactions related to Hong Kong stocks expanded significantly, making it the largest $CAMC HS Sci-Tech ETF QDII (513330.SH)$ The volume was 0.307 billion lots, and the turnover reached 14.2 billion yuan;$ChinaAMC Hang Seng Tech Index ETF (513180.SH)$The turnover volume was 0.188 billion yuan, and the turnover reached 11.8 billion yuan. Both the turnover and volume hit record highs since the fund was established, and together ranked among the top ten in the domestic ETF market by transaction amount.

Zhang Yidong, the global chief strategy analyst at Societe Generale Securities, believes that in the medium term, under the trend of reallocating residents' wealth, industrial capital, and insurance and wealth management funds to the Chinese stock market, the strength of domestic capital allocating A shares and Hong Kong stocks will alternately rise.

In addition to domestic capital, the macro research team of Huafu Securities released a research report stating that judging from the latest marginal changes, the net inflow of overseas capital from Hong Kong stocks began in September, and the net inflow of capital from international intermediaries reached HK$39.6 billion since mid-late, exceeding the net inflow of HK$20.5 billion southbound capital. Currently, the Hong Kong stock market is still in progress, and there is still room for growth in the future. Structurally, if international intermediary capital continues to return from the Hong Kong stock market, the growth sector represented by Hang Seng Technology is expected to continue to dominate.

Chen Guo, chief strategist at CITIC Construction Investment, believes that the Hong Kong stock bull market is not over. The basis for the current bull market in Hong Kong stocks is that it has continued to be bearish since 2021. Even now, the valuation of Hong Kong stocks is still low in the world. The essence of the recent Hong Kong stock market and the A-share market is a “revaluation of confidence” in the Chinese stock market. Strategically, we continue to be firmly optimistic about the Chinese stock market, including Hong Kong stocks. The difference between Hong Kong stocks and A-shares is that previously, some foreign investors also misjudged that Hong Kong will become the site of the Asian financial center. Hong Kong stock risk-free interest rates were more affected by the Federal Reserve's interest rate cut cycle, the valuation discount level of Hong Kong stocks compared to A-shares is still above the historical average, and when foreign investors supplement the Chinese stock market, Hong Kong stocks are an important or even priority choice for many value investment types of foreign capital.

Editor/Somer