On June 29, the Hong Kong stock market saw southbound capital record a net outflow of HK$10.339 billion.
Specifically, net outflows via the Shanghai-Hong Kong Stock Connect amounted to HK$5.475 billion, while the Shenzhen-Hong Kong Stock Connect recorded a net outflow of HK$4.864 billion.
TENCENT (00700.HK), SMIC (00981.HK), and HUA HONG GRACE (01347.HK) were the stocks that attracted the most net buying from southbound funds.
Conversely, the heaviest net selling was directed at the Tracker Fund (02800.HK), the CSOP Hang Seng TECH Index ETF (03033.HK), and BABA-W (09988.HK).
Key Purchases and Rationale
TENCENT (00700.HK) received net purchases of HK$1.511 billion.
Analysts at Goldman Sachs highlighted the unique advantages of Tencent's WeChat, noting its massive user base, rich social data, and mature mini-program ecosystem.
These factors combine to make it one of the most promising platforms for deploying consumer-facing AI agents.
The report stated that the recovery of Tencent's valuation multiples in the coming quarters will largely depend on the progress of its AI narrative, with user penetration of WeChat's AI assistant being a critical variable.
SMIC (00981.HK) and HUA HONG GRACE (01347.HK) secured net inflows of HK$948 million and HK$619 million, respectively.
The chairman of Vanguard International Semiconductor indicated that the 8-inch wafer foundry market is currently in a state of undersupply, with strong customer demand expected to persist, supported by order visibility of 3-5 months.
He anticipates the shortage in the 8-inch wafer foundry market will continue into 2026.
Additionally, reports suggest TSMC may implement a comprehensive price hike for its advanced process nodes.
KB LAMINATES (01888.HK) and KINGBOARD HLDG (00148.HK) saw net buying of HK$603 million and HK$486 million, respectively.
Kingboard Holdings' new project in Shaoguan, Guangdong, with an annual capacity of 70,000 tons of electronic-grade glass fiber yarn, commenced production on June 26, three months ahead of schedule.
This project is expected to alleviate the severe shortage of upstream raw materials in the PCB industry chain.
Furthermore, KB Laminate Products has raised prices for copper-clad laminates and prepregs five times this year, with the latest increase on June 16 being 15%, bringing the cumulative price hike to over 40%.
YOFC (06869.HK) attracted net purchases of HK$120 million.
A wave of capacity expansion for optical fiber preforms and fibers is underway.
Analysts at Nomura noted that supply constraints are likely to persist in the short term, benefiting YOFC through higher spot fiber prices and margin expansion from greater involvement in the AI data center market.
However, the report cautioned that if new entrants successfully develop high-end products and execute their capacity expansion plans smoothly, market competition could intensify, potentially pressuring margins for incumbents like YOFC.
GIGADEVICE (03986.HK) received net inflows of HK$35.31 million.
Citing foreign media reports, six sources revealed that Apple is lobbying the US government for approval to purchase memory chips from ChangXin Memory Technologies to mitigate cost pressures from rising memory chip prices.
Citigroup analysts believe obtaining approval may be challenging, but Apple's consideration itself serves as a strong endorsement of CXMT's technological progress.
This news is expected to be positive for CXMT and its supply chain.
Major Sell-offs and Market Views
The Tracker Fund (02800.HK) and the CSOP Hang Seng TECH Index ETF (03033.HK) faced net selling of HK$7.346 billion and HK$1.202 billion, respectively.
CITIC Securities analysts pointed out that Hong Kong stocks have significantly underperformed other major Asian markets since 2026, citing three main pressures.
On the fundamental side, there has been concentrated downward revisions in earnings for heavyweight stocks, particularly in internet platforms and the automotive sector, which have not been offset by upward revisions in hard tech companies.
Regarding valuation, the US dollar and US Treasury yields have imposed dual constraints on the offshore market, leading to sustained foreign capital outflows.
At the micro trading level, the third quarter faces liquidity supply disruptions from IPOs and share lock-up expiries.
In other notable flows, MONTAGE TECH (06809.HK) saw net buying of HK$73.96 million, while BABA-W (09988.HK) experienced net selling of HK$427 million.
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