On August 31st, the Hong Kong stock market witnessed a net southbound capital inflow of HK$2.139 billion. The Shanghai-Hong Kong Stock Connect registered a net purchase of HK$2.058 billion, while the Shenzhen-Hong Kong Stock Connect saw a net purchase of HK$81 million.
The top stocks by net buying were KB Laminates (01888), Tencent (00700), and Yangtze Optical Fibre and Cable (06869). Conversely, the most sold stocks included CCB (00939), ICBC (01398), and Hua Hong Semiconductor (01347).
Where Capital is Heading
KB Laminates (01888) secured a net inflow of HK$569 million. The copper-clad laminate leader issued its latest price hike notice, marking the seventh increase this year. According to a Citi report, the bank has initiated a 30-day upside catalyst observation on the company, anticipating another price increase for electronic-grade fiberglass cloth in early September, with a potential follow-up CCL price adjustment announcement by early October.
Tencent (00700) attracted net purchases of HK$411 million. The tech giant officially released and open-sourced its Hunyuan Hy4 preview language model, with an official version expected later. Additionally, Workbuddy is offering a two-week free trial. CICC believes that as the two-way data loop between models and agents matures and the path to product commercialization becomes clearer, market confidence in the returns on Tencent's AI investments is likely to strengthen. The firm maintains a positive outlook on the company's strategic execution and delivery capabilities in the long-term AI landscape.
SMIC (00981) saw net buying of HK$54.61 million, whereas Hua Hong Semiconductor (01347) experienced net selling of HK$291 million. According to Counterpoint data, the global pure-play foundry market grew 29% year-on-year in the second quarter, with TSMC leading at a 73% market share for two consecutive quarters—ten times that of second-placed Samsung (7%). SMIC ranked third with a 5% share.
Profit-Taking in Banking Shares
Mainland Chinese bank stocks rallied broadly today, prompting some southbound funds to take profits at higher levels. ICBC (01398) and CCB (00939) faced net selling of HK$578 million and HK$1.03 billion, respectively. Citi's research indicates that the 21 Chinese banks it covers recorded a 9.9% year-on-year increase in pre-provision operating profit for the first half, surpassing expectations, supported by robust trading gains, resilient loan growth, and stabilizing net interest margins. The report suggests that with a sustainable return on equity of approximately 8% and sustainable loan growth of around 5%, China's major banks will gradually raise their dividend payout ratios to approximately 40%.
Additionally, Yangtze Optical Fibre and Cable (06869) and Alibaba-W (09988) received net inflows of HK$357 million and HK$2.806 million, respectively, while Shandong Gold (01787) saw net selling of HK$95.31 million.