Mainland Investors Divest HKD 1.25 Billion in Hong Kong Markets, Piling Nearly HKD 2.3 Billion into Tencent While Dumping Tracker Fund

On March 16, mainland investors recorded a net sell-off of HKD 1.25 billion in the Hong Kong stock market. Specifically, the Shanghai-Hong Kong Stock Connect saw net outflows of HKD 2.735 billion, while the Shenzhen-Hong Kong Stock Connect registered net inflows of HKD 1.485 billion.

Tencent (00700) emerged as the top stock by net purchases from mainland investors. Other heavily bought stocks included Alibaba-W (09988) and BYD Company (01211). In contrast, the Tracker Fund (02800) and SMIC (00981) faced the largest net sell-offs.

Tencent attracted net inflows of HKD 2.286 billion. Recent developments include the official launch of its AI agent WorkBuddy on March 9. On March 14, Tencent Cloud initiated a nationwide free installation program for its "Lobster" project. Citigroup suggested that rapid advancements in Lobster technology could reshape corporate growth models. Additionally, with Apple and Google Play reducing commission rates, Goldman Sachs estimates a potential 1.9% boost to Tencent's operating profit.

Alibaba-W received net purchases of HKD 706 million. Reports indicate that Alibaba is set to unveil a new AI agent product tailored for enterprise clients, built on its flagship Tongyi Qianwen model. Sources revealed that Alibaba plans to integrate services like Taobao and Alipay with this AI agent, which is being developed by the team behind DingTalk.

BYD Company saw net inflows of HKD 586 million. Media reports stated that on March 16, BYD's Executive Vice President Li Ke announced at an event in Rio de Janeiro that BYD's Brazil plant has secured export orders totaling 100,000 vehicles from Argentina and Mexico, with each country ordering 50,000 units. Located in Camaçari, Bahia, the plant currently has an annual capacity of 150,000 vehicles and aims to increase it to 600,000 in phases.

Geely Auto (00175) garnered net purchases of HKD 442 million. Its premium EV brand Zeekr will begin presales for its new flagship SUV, the Zeekr 8X, tonight. Furthermore, insiders disclosed that Mercedes-Benz Group is in early talks to deepen collaboration with Geely, aiming to enhance its R&D capabilities in China.

Semiconductor stocks showed mixed performance. Hua Hong Semiconductor (01347) attracted net inflows of HKD 387 million, while SMIC faced net outflows of HKD 330 million. Reports suggest that Hua Hong, through Huali Microelectronics, has developed 7nm manufacturing technology for AI chips and plans to commence production at its Shanghai facility. Successful implementation would make Huali the second domestic chipmaker after SMIC with 7nm capability.

CNOOC (00883) received net purchases of HKD 347 million. Goldman Sachs highlighted in a report that CNOOC and PetroChina have demonstrated strong cash flow generation over the past three years, with improved cash return on capital invested rankings globally, justifying valuation convergence. The firms are expected to maintain top-tier free cash flow yields of around 10%.

The Tracker Fund experienced net outflows of HKD 3.573 billion. Guoyuan International noted that due to Iran's resilient resistance and political durability, the conflict may prolong, potentially sustaining external uncertainties for Hong Kong markets. A protracted conflict could keep energy prices elevated, shifting global markets from short-term sentiment-driven trading to long-term fundamental adjustments, extending Hong Kong's market correction period.

Additionally, Changfei Optical Fiber (06869) and Shandong Molong (00568) saw net inflows of HKD 165 million and HKD 74.83 million, respectively.