Northbound funds | Northbound net sell of RMB21.326 billion; northbound buys AI hardware stocks throughout the day, sells tech stocks and Hong Kong ETFs on rallies

On November 5 in the Hong Kong stock market, northbound trading recorded a net sell of HK$21.326 billion. Among this, Stock Connect (Shanghai) recorded a net sell of HK$13.339 billion, and Stock Connect (Shenzhen) recorded a net sell of HK$7.987 billion. The stocks with the largest net buys by northbound funds were KB LAMINATES (01888), YOFC (06869), and Semiconductor Manufacturing International Corporation (00981). The stocks with the largest net sells by northbound funds were TRACKER FUND OF HONG KONG (02800), CSOP Hang Seng TECH Index ETF (03033), and Tencent (00700). Active stocks under Stock Connect (Shanghai) Active stocks under Stock Connect (Shenzhen) AI hardware stocks plunged today, and northbound funds bought the dip. KB LAMINATES (01888), YOFC (06869), and Semiconductor Manufacturing International Corporation (00981) received net buys of HK$773 million, HK$499 million, and HK$262 million, respectively. The Democratic Party gained control of the House and Senate. JPMorgan believes that the probability of the suspension measures ultimately becoming a permanent ban is limited, but the pace of industry expansion has already been materially affected. Huatai pointed out that the substantive impact will first appear as delays in power supply to parks and postponements in equipment procurement, acceptance, and payment collection. Z.AI (02513) received a net buy of HK$92.2 million. JPMorgan released a research report stating that demand for Chinese AI models is currently between two demand steps: programming and broader white-collar work. AI demand outside programming has appeared later than the bank originally expected, but the bank believes the market is overly pessimistic, remains bullish on the sector, and lists Z.AI as its top pick. CNOOC (00883) suffered a net sell of HK$166 million. On Wednesday, Brent crude oil plunged more than 10% in a single day; WTI crude fell more than 9%. HSBC released a research report stating that CNOOC's third-quarter results were affected by impairments and slower production growth. Despite strong oil prices, net profit rose only 3% year-on-year to RMB33 billion, while falling 29% quarter-on-quarter. During the period, realized oil prices rose 32% year-on-year and natural gas prices rose 8%, but most of the benefit from higher commodity prices was offset by impairments on overseas assets and higher costs and taxes. Internet stocks surged sharply, and northbound funds sold on the rally. BABA-W (09988) and Tencent (00700) suffered net sells of HK$837 million and HK$2.549 billion, respectively. Morningstar recently released a research report stating that Chinese chipmakers are currently benefiting from growth in AI capital expenditure, but in the long run, internet companies are the ultimate beneficiaries. It listed Tencent and Alibaba as top picks, noting that Tencent's and Alibaba's existing businesses can provide profits. If AI adoption or monetization progress falls short of expectations, their operating conditions can still remain relatively resilient, while AI also helps the development of internet, advertising, and gaming businesses. TRACKER FUND OF HONG KONG (02800), CSOP Hang Seng TECH Index ETF (03033), and Hang Seng H-Share Index ETF (02828) suffered net sells of HK$7.664 billion, HK$4.391 billion, and HK$1.672 billion, respectively. SPDBI pointed out that the Chinese market is still mainly affected by the domestic policy cycle and liquidity environment. U.S. tariffs and technology restrictions on China mainly rely on administrative authorization, and a change in congressional control is unlikely to change the direction of China policy. Hong Kong stocks have strong correlation with U.S. stocks and historically have gradually strengthened after midterm elections, but attention should be paid to Hong Kong stocks' relatively high sensitivity to U.S. Treasury yields and U.S. dollar liquidity.