On May 21st, Mainland investors recorded a net sell-off of HKD 6.105 billion in the Hong Kong stock market. Specifically, the Shanghai-Hong Kong Stock Connect saw a net sell of HKD 1.26 billion, while the Shenzhen-Hong Kong Stock Connect recorded a net sell of HKD 4.845 billion. The stocks that attracted the most net buying from mainland capital were WELLCELL H-NEW (02477), SMIC (00981), and CNOOC (00883). Conversely, the most heavily net-sold stocks were the Tracker Fund (02800), Alibaba-W (09988), and TENCENT (00700).
WELLCELL H-NEW (02477) experienced a dramatic plunge of nearly 85% today, during which mainland investors bought over HKD 1.24 billion worth of shares at lower prices. This follows the company's announcement in March of a proposed 1-for-4 stock split. The split and parallel trading officially commenced on May 4th. Concurrently with the split, the stock was included in the Stock Connect program on May 6th. On May 11th, the company adjusted the use of its raised funds, and on May 15th, it announced its formal entry into the AI computing power services sector, focusing on areas such as computing power leasing platforms, scheduling and optimization platforms, and Token aggregation APIs.
Semiconductor stocks showed mixed performance. SMIC (00981) received net buying of HKD 805 million, while Hua Hong Semiconductor (01347) faced net selling of HKD 257 million. Morgan Stanley noted that TSMC and Samsung are consolidating their mature process capacities, which could create opportunities for second-tier foundries. The report suggests an upcoming upcycle for mature processes, partly driven by concerns among some smartphone/PC clients about potential shortages as AI infrastructure construction is expected to continue for another two years. The bank forecasts a shortage in mature process capacity could emerge in the second half of 2027.
CNOOC (00883) attracted net buying of HKD 425 million. Goldman Sachs highlighted that visible crude oil inventories have been declining at a record pace of 8.7 million barrels per day so far in May, nearly double the average rate since the onset of recent conflicts. The International Energy Agency's monthly oil market report also pointed to a rapid drawdown of 246 million barrels in global observed oil inventories in March and April. The IEA estimates that the oil market will remain in a significant supply deficit until at least October, even if Middle East tensions subside quickly.
TENCENT (00700) and Alibaba-W (09988) were net sold for HKD 1.084 billion and HKD 1.526 billion, respectively. This comes as major domestic cloud service providers are collectively raising their capital expenditure guidance. TENCENT's Q1 2026 capital expenditure reached RMB 31.94 billion, up 16% year-on-year, with expectations for a significant increase in the second half as domestic chips are delivered. Alibaba's capital expenditure for the same period was RMB 26.887 billion, a 9.24% increase. Alibaba's CEO stated that current server utilization is nearing saturation, suggesting expenditure over the next five years could far exceed the original target of RMB 380 billion. Additionally, ByteDance has raised its annual capital expenditure plan to over RMB 200 billion.
The Tracker Fund (02800) saw net selling of HKD 2.474 billion. Soochow Securities commented that while Hong Kong stocks face short-term pressure from overseas factors, they retain allocation value from a medium to long-term perspective. The surge in US Treasury yields, with the 10-year and 30-year yields breaking 4.5% and 5% respectively, is impacting tech and growth stocks in the near term. Ongoing NACHO trading in the US, coupled with stronger-than-expected inflation data, is leading the market to price in persistent inflation. The potential retreat of oil prices in late May is seen as a key factor to watch.
Furthermore, Montage Technology (06809) and Yangtze Optical Fibre and Cable (06869) were net sold for HKD 42.14 million and HKD 262 million, respectively.
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