On March 5, mainland investors recorded a net sell-off of HK$27.735 billion in Hong Kong stocks via the Stock Connect programs. The Shanghai-Hong Kong Stock Connect saw net selling of HK$16.238 billion, while the Shenzhen-Hong Kong Stock Connect recorded net selling of HK$11.497 billion.
The stocks receiving the largest net purchases from mainland capital were Tencent (00700), CNOOC (00883), and SHANDONG MOLONG (00568). In contrast, the securities with the largest net sell-offs were the Tracker Fund (02800), the Hang Seng China Enterprises Index ETF (02828), and the CSOP Hang Seng TECH Index ETF (03033).
Among actively traded stocks, Tencent (00700) attracted net buying of HK$1.541 billion. According to a UBS research report, success in the AI field depends on integrating high-quality models, a strong user base, and extensive data. With WeChat's 1.4 billion users covering diverse scenarios like social, commercial, and content, plus an active mini-program ecosystem, Tencent's unique advantages are considered difficult to replicate, and the firm is viewed as having strong potential in the AI agent domain.
Oil and gas stocks saw further accumulation. CNOOC (00883) and SHANDONG MOLONG (00568) received net purchases of HK$321 million and HK$82.7 million, respectively. The oil market continues to monitor navigation conditions in the Strait of Hormuz. While an Iranian commander stated that Iran has not blocked the strait, the Islamic Revolutionary Guard Corps declared that military and commercial vessels belonging to the U.S., Israel, European countries, and their supporters are prohibited from passing through and will be targeted if detected.
SMIC (00981) garnered net buying of HK$55.66 million. A Goldman Sachs research report indicated that SMIC's management holds an optimistic view on the upturn in China's semiconductor capital expenditure cycle, believing that the rise of fabless technology migration will drive this cycle. The bank expects advanced logic and memory to be the main drivers of capital expenditure growth, with the supply chain increasing investments to narrow the gap between the domestic Chinese supply chain and overseas leaders.
Yangtze Optical Fibre and Cable (06869) received net purchases of HK$28.79 million. This follows Nvidia's announcement of multi-year strategic collaborations with two leaders in optical communications, Lumentum and Coherent, including a $2 billion investment in each company. Kaiyuan Securities views this as further confirmation that optical communication technology may become the core technology for future AI data center interconnects, highlighting significant opportunities from upgrades in silicon photonics, CPO, OCS, hollow-core fibre, and thin-film lithium niobate technologies.
Alibaba-W (09988) faced net selling of HK$2.028 billion. On March 4, the core lead of Alibaba's Qwen model announced his departure. On the morning of March 5, Alibaba CEO Wu Yongming confirmed the company had approved the resignation. A Google DeepMind executive publicly invited the Qwen team to join. J.P. Morgan noted that Alibaba's Qwen team is undergoing significant structural changes, with talent loss introducing short-term risk premiums.
Mainland capital heavily sold Hong Kong ETF holdings. The Tracker Fund (02800), the Hang Seng China Enterprises Index ETF (02828), and the CSOP Hang Seng TECH Index ETF (03033) saw net sell-offs of HK$13.666 billion, HK$6.073 billion, and HK$3.9 billion, respectively. Haitong International suggested the current adjustment in Hong Kong stocks stems from "AI anxiety," a siphon effect drawing capital to Korean and Japanese markets, and叠加Persian Gulf geopolitical risks. In contrast, A-shares are viewed as more favorable under the theme of "hard tech and HALO price recovery," while Japanese, Korean, and Taiwanese markets are strengthening driven by AI hardware demand. Concurrently, internal capital in Hong Kong is avoiding potential bad news ahead of internet companies' Q4 earnings reports due to profit and policy uncertainties, keeping the overall short-selling turnover ratio in Hong Kong at a high level of 20%.
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