Source: Brokerage China
Author: Wu Qi
A number of Hong Kong stocks have repeatedly reached new highs.
Since the market opened in February, the Hong Kong stock market has continued to rebound across the board throughout the year. $Hang Seng Index (800000.HK)$ The index has recovered its losses and turned positive for the year. Although the Hong Kong stock market has fluctuated throughout the year, a number of high-quality Hong Kong-listed companies' stock prices have shown an upward trend, such as $KINGSOFT CLOUD (03896.HK)$ 、 $LAOPU GOLD (06181.HK)$、 $GIANT BIOGENE (02367.HK)$ 、 $SMIC (00981.HK)$ Companies listed in Hong Kong frequently hit all-time high prices.
The rebound in the Hong Kong stock market cannot be separated from the support of domestic funds. Data shows that funds flowing south have sustained large net inflows into the Hong Kong stock market, while public funds actively increased their allocation to Hong Kong stocks, with the allocation ratio to Hong Kong stocks hitting a historic high at the end of last year.
Looking ahead, institutions believe that overseas factors suppressing Hong Kong stocks are expected to see a turnaround, and the valuation in the historical low range is quite attractive.
A number of Hong Kong stocks have reached historical highs.
On February 4, the Hong Kong stock market opened higher and rose. $Hang Seng Index (800000.HK)$ Once rose more than 3%, $Hang Seng TECH Index (800700.HK)$Once rose more than 5%, by the close, the Hang Seng Index rose by 2.83%, and the Hang Seng TECH Index rose by 5.06%.
Many Hong Kong stocks have hit historical highs. $XIAOMI-W (01810.HK)$ Opened high and continued to rise, with the stock price reaching a maximum of 40.1 HKD per share, setting a new historical high, and the total Market Cap once surpassed 1 trillion HKD.

Among companies with a trillion scale, $ICBC (01398.HK)$ 、 $CCB (00939.HK)$ 、 $HSBC HOLDINGS (00005.HK)$ 、 $BANK OF CHINA (03988.HK)$ The stock prices of these companies have all reached historical highs.
Some popular Listed in Hong Kong companies such as $KINGSOFT CLOUD (03896.HK)$ 、 $LAOPU GOLD (06181.HK)$ 、 $GIANT BIOGENE (02367.HK)$ 、 $SMIC (00981.HK)$ H shares and other stock prices continue to reach new highs, with increasing enthusiasm.
$KINGSOFT CLOUD (03896.HK)$ In the past two days, the stock price has risen by 44%, and over the past three months, the cumulative increase exceeds four times. Kingsoft Cloud is the only strategic cloud platform within the Xiaomi Group and Kingsoft ecosystem, attracting continuous market attention due to AI application concepts.

The enthusiasm for AI continues to escalate, catalyzing the strong performance of the Semiconductors Sector; Semiconductor Manufacturing International Corporation's H shares have risen nearly 20% in the past two days, with the stock price reaching a historical high, and the increase for the year has expanded to 43.7%.
Some high-scarcity emerging consumer stocks are also attracting capital.
$LAOPU GOLD (06181.HK)$ The crazy trend continues, with the increase for the year expanding to 87%. As gold prices reach new highs and with the scarcity of its high-end brand positioning in domestic retail, Lao Pu Gold has become a consumer stock that has received considerable attention over the past two years.
$POP MART (09992.HK)$The single-day increase was 11.17%, with a cumulative increase of nearly 5 times over the past year, and the company's latest stock price is close to the historical high of 105.21 Hong Kong dollars. A well-known institution, Macquarie, analyzed that POP MART holds a leading position in China, and its track record in IP lifecycle management can drive sustainable growth, with emerging products having huge revenue potential.

In addition, some well-known technology network companies have seen their stock prices exit from a slump and welcome a strong rebound, such as $JD-SW (09618.HK)$ 、 $BABA-W (09988.HK)$ Companies like this have seen an increase of nearly 20% in stock prices year-to-date, boosting the Hang Seng TECH Index's year-to-date gain to 11.36%.
Funds continue to be aggressively acquired, and fund managers are increasing their allocations.
It is worth noting that in recent years, the Hong Kong stock market has been affected by significant outflows of foreign capital, resulting in a sustained decline in stock price performance, which at one point became one of the worst-performing markets globally.
However, the Hong Kong stock market continues to attract domestic funds for net inflow due to the diversity of listed companies and lower valuations.
In January of this year, net inflows of funds to Hong Kong stocks continued to maintain a large amount, with a monthly net inflow of approximately 118.5 billion yuan, reaching the highest single-month amount since February 2021, and this figure is also the third highest monthly total in history.
Public funds are one of the important institutional investors increasing their shareholding in the Hong Kong stock market. Data from China International Capital Corporation shows that, in terms of hold positions, public funds actively increased their stake in Hong Kong stocks in the fourth quarter of last year, reaching the highest proportion since 2019. By the end of last year, public funds held a market cap of 492.8 billion yuan in Hong Kong stocks, an increase of 8.1% from 455.8 billion yuan in the third quarter of last year. Considering the overall decline of the Hong Kong stock market in the fourth quarter, it indicates that public funds actively adjusted their allocation to Hong Kong stocks.
According to data from GTJA Securities, in the fourth quarter of 2024, the allocation proportion of active management funds to Hong Kong stocks reached a historical high, with an actual allocation proportion of 14.3%, an increase of 1.9 percentage points from the previous quarter, surpassing the second quarter of 2021. Among them, leading technology symbols in the Hong Kong stock market received significant reallocations from active management funds, such as XIAOMI-W, $TENCENT (00700.HK)$and Semiconductor Manufacturing International Corporation Listed in Hong Kong, etc.
Many public funds continue to increase their allocation to high-quality companies in Hong Kong stocks, providing stock positions. The fund allocation of the China Southern Asset Management's Fund of Hong Kong and Shanghai shares selected fund has increased from 87.66% at the end of the third quarter of last year to 92.4% at the end of the fourth quarter, which is a historical high. The fund allocation of the Jiashi Hong Kong Stock Internet Industry Core Assets Fund has risen from 93.03% at the end of the third quarter of last year to 93.58% at the end of the fourth quarter, breaking the historical maximum value again.
The fund allocation of the Huatai-Pinebridge Hong Kong and Shanghai New Value Fund has increased from 77.29% at the end of the third quarter of last year to 83.36% at the end of the fourth quarter, setting a new historical high. The fund's manager, Wang Zhihua, stated that the fund continued to hold the high-quality core assets of China listed in Hong Kong in the fourth quarter of last year, maintaining a high position. The industry was balanced, with allocations to digital economy represented by large internet platforms, brand consumption, innovative pharmaceuticals, regional finance, etc., while also continuing to allocate to value blue chips that meet high dividends and low valuation characteristics, and further explore listed companies in Hong Kong with solid business models, outstanding core competitiveness, sound corporate governance, and commitment to high-quality development.
In terms of specific companies, among Hong Kong-listed companies, TENCENT, Alibaba, and XIAOMI-W are included.$CNOOC (00883.HK)$、$GCL TECH (03800.HK)$、$CHINA TOWER (00788.HK)$Companies like Kingsoft Cloud and Semiconductor Manufacturing International Corporation Listed in Hong Kong have also seen varying degrees of shareholding increase from the Northbound funds.
Institutions: The overseas factors suppressing Hong Kong stocks are expected to welcome a turning point.
In January 2025, the Hong Kong stock market showed fluctuating performance, with the monthly changes of the Hang Seng TECH Index and the Hang Seng Index being 5.7% and 0.8% respectively. However, the trading activity in the Hong Kong stock market continued to decline in January.
Since the start of February, the Hong Kong stock market has been continuously rising. How will the future performance of the Hong Kong stock market unfold?
"Looking ahead, the Hong Kong stock market's Technology Sector, as one of the core assets closely linked to domestic demand, is likely to welcome opportunities for valuation recovery," said the manager of Huatai-Pbsy CSI Hong Kong Stock Connect Technology ETF. Specifically,
Firstly, the overseas interest rate cut cycle has begun, and the trend of domestic economic endogenous growth momentum repair is clear, which will provide support for the Hong Kong stocks from both the numerator and the denominator. At the same time, the continuous inflow of southern capital and industrial capital repurchases will further enhance the resilience of Hong Kong stocks.
Secondly, from a global asset allocation perspective, the valuation of Hong Kong stocks remains significantly undervalued, standing out in comparative advantages relative to overseas markets such as the USA and India.
Thirdly, the cost reduction and efficiency enhancement results of platform economy enterprises have been remarkable in recent years, and they continue to strengthen earnings certainty through the development of high-margin businesses and other high-quality growth strategies.
At the same time, the Hong Kong stock market continues to increase dividends and buybacks, with significant shareholder returns expected to welcome valuation repair opportunities. The Central Economic Work Conference at the end of 2024 listed 'greatly boosting consumption, improving investment efficiency, and comprehensively expanding domestic demand' as the top priority for 2025, proposing 'implementing special actions to boost consumption' and 'intensifying and expanding the implementation of the 'two new' policies' to accelerate the release of consumption potential. It is anticipated to create strong demand for Electric Vehicles, Consumer Electronics, as well as online and offline consumption in the platform economy.
Fourthly, the PE of the CSI Hong Kong Stock Connect Technology Index is at a historically low level since its inception, making the valuation quite attractive.
In the medium to long term, the Hang Seng Qianhai Fund believes that as the short-term shock from the strength of long-term US Treasury yields and the US dollar subsides, the suppression of Hong Kong stocks by overseas factors is expected to change. China's policy easing may strengthen, enhancing the attractiveness of allocating Chinese assets. Future attention is suggested to be on changes in US inflation expectations and the impact of the policy package after the inauguration of the new US president.
On the industry allocation level, facing a relatively complex domestic and international environment, assets with stable high dividends can provide rare opportunities for returns in the investment portfolio. At the same time, continued attention can be paid to opportunities in interest rate-sensitive industries in growth sectors, such as Internet Plus-Related, Electric Vehicles, Technology Hardware, and Biomedical, among others, which have longer durations.
Editor/Rocky