Despite the market volatility, the funds entering the market against the trend are increasing.

Recently, there has been an increase in the phenomenon of foreign funds sweeping up some Chinese stocks, and BlackRock has increased its holdings.$PDD Holdings (PDD.US)$Gaining market attention. According to the latest global fund manager monthly survey released by Bank of America, "going long on Chinese stocks" ranked in the top 3 of the most popular trading rankings in the October survey, with a high percentage of 14%. In addition, the net percentage of global fund managers expecting a stronger Chinese economy in the next 12 months has reached 48%, the highest level since April 2023.

This week, the willingness of industrial capital to buy back and the southward movement of funds have strengthened again, with the net inflow of southbound funds reaching 27.735 billion yuan. Financial blue-chip stocks and technology stocks have become the main direction of fund inflows, and these two sectors are also the main forces in the buyback wave of 2024. This "dumbbell"-style investment is becoming a key strategy for current public and private investment institutions.

Foreign investors continue to buy Chinese assets.

Recently, there has been an increase in the phenomenon of foreign funds sweeping up some Chinese stocks. According to the latest data from the Hong Kong Stock Exchange, on October 17, Morgan Stanley increased its holdings.$CHINA VANKE (02202.HK)$6.7426 million shares, totaling approximately 49.3732 million Hong Kong dollars. According to the disclosure document on October 22, BlackRock increased its holdings of China's e-commerce PDD Holdings, with a third-quarter holding of 33.01 million shares, accounting for 2.4%.

The latest Global Fund Manager Monthly Survey released by Bank of America also shows that 'long China stocks' ranked in the 'TOP3' of the hottest trading list in the October survey, reaching a high proportion of 14%, second only to 'long magnificent 7' at TOP1 (43%) and 'long gold' at TOP2 (17%). In addition, the net proportion of global fund managers predicting a stronger Chinese economy in the next 12 months reached 48%, the highest level since April 2023.

Bank of America's team suggests a bullish stance on stocks listed in the USA. $iShares China Large-Cap ETF (FXI.FTOLD.US)$ call optionsOptions strategy.Early in September, when the Chinese stock market index was near its low point, they recommended a call option structure that delivered a return rate of over 360%. In addition to Bank of America, other major Wall Street banks also see more return potential in Chinese assets. Goldman Sachs' trading department recommended a Hang Seng Enterprise Options Spread and options hedging strategy (buying put options while selling call options) to take advantage of.Implied volatilityOpportunities for growth.

Jiashi Fund's stock strategy analyst Leng Chuansi believes that compared with other global markets, the valuation of Hong Kong stocks still has room for growth, especially with a 10% discount compared to emerging markets. Overseas investors are more concerned about fundamental changes. If domestic economic indicators such as real estate and consumer stability, foreign capital may continue to inflow. Therefore, from a valuation perspective, Hong Kong stocks are currently in a moderately low neutral state, still offering room for positioning.

The net inflow scale of southbound funds continues to expand.

Along with the approaching adjustment of Hong Kong stocks,ResistanceContrary to the trend, funds are warming up again, and the willingness of industrial capital repurchase and southbound funds is strengthening. Among them, southbound funds continue to maintain a net inflow, and the scale is continuously expanding.

Within this week (October 21st to 23rd), the net inflow scale of southbound funds has reached 27.735 billion yuan, with a net inflow scale of 12.43 billion yuan on October 21st, reaching a new high since March. So far, the net purchase amount of southbound funds this year has reached 525.9 billion yuan.

Industry insiders point out that if the current inflow speed continues, the net purchase amount of southbound funds in the year is likely to hit a historical high. According to data from East Money Information Choice, although there are still over two months left this year, the net purchase amount of southbound funds is already the second highest in history, second only to 2020's 596.7 billion yuan. This trend indicates that mainland investors' confidence in the Hong Kong stock market is gradually strengthening.

After another adjustment in the Hong Kong stock market, the total amount of stock repurchases in the Hong Kong stock market has risen again. Last week, the number of industrial capital repurchase cases surged to 236, and the repurchase amount in the past two weeks reached 5.8 billion Hong Kong dollars, close to the level in April of this year. As of October 22, 253 Hong Kong stocks have been repurchased by companies this year, with 55 individual stocks accumulating repurchase amounts exceeding one billion Hong Kong dollars. This move helps stabilize market prices, improve shareholder returns, and boost market confidence.

The turnover and turnover ratio of Hong Kong stocks have slightly decreased, with the short selling ratio reaching a historical low. The percentage of short selling decreased by 3.9% on a month-on-month basis, reaching a historically low level, and the Hang Seng Greed Fear Index dropped by 5.2 points. Currently, market sentiment has fallen to a neutral level. Guotai Junan's research report believes that the valuation of Hong Kong stocks has fallen, with still upward potential in the future.

Dumbbell investment strategy is favored.

What is suitable for buying Hong Kong stocks now? Financial blue-chip stocks and technology stocks have become the focus of attention for public and private institutional investors. Moreover, these two sectors are also the main force behind the buyback frenzy in 2024. Last week, high-dividend sectors such as banks/operators once again became the primary areas for southbound net inflows, and the technology sector also became the focus of southbound capital investments. This configuration resembles a "dumbbell."

With the implementation of the initial 300 billion yuan repurchase and refinancing policy, state-owned enterprises listed on HKEX that have significantly increased their repurchase holdings are favored by the market, with significant inflows of funds. Among them, focusing on high-quality high-dividend assets in the Hong Kong stock market,$ChinaAMC CSI (513910.SH)$Since September, the Hong Kong state-owned enterprises dividend ETF (513910.SH) has risen by 29% from its low point, with an increase of 0.223 billion shares in the past 20 trading days, and the latest number of shares is 0.489 billion.

In addition, the technology sector is also a key focus for institutions. Fund manager He Bo of Rongtong Fund believes that technology sectors represented by the internet, medical care, and electric vehicles have long-term competitiveness. As the domestic internet industry enters a new stage of healthy development, the profitability of technology companies listed on HKEX is gradually improving, and the competitive landscape is becoming more solid. Taking AI as an example, although there may be a slight delay in progress, domestic technology companies are making significant investments in artificial intelligence. Once the relevant applications are implemented, the valuation repair is expected to approach the level of overseas counterparts.

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