Despite all three major indices of the Hong Kong stock market closing lower, southbound funds recorded a net inflow of HKD 10.018 billion, signaling a positive trend. A recent report from Goldman Sachs clearly indicates that a "slow bull" market is forming in the Chinese stock market.
On October 22, the three major indices in Hong Kong closed in the red. The Hang Seng Index fell by 0.94% to 25,781.77 points, the Hang Seng Technology Index dropped by 1.41%, and the National Enterprises Index decreased by 0.85%. Although the market performance was weak, there was a significant net inflow of southbound funds amounting to HKD 10.018 billion in a single day.
Looking at specific fund flows, the Tracker Fund of Hong Kong saw a net inflow of HKD 1.994 billion, with China National Offshore Oil Corporation and Semiconductor Manufacturing International Corporation receiving net purchases of HKD 1.425 billion and HKD 642 million, respectively, making them the most favored stocks. Conversely, companies like Hua Hong Semiconductor and Xiaomi Group faced varying degrees of net selling.
Market Outlook Goldman Sachs, in its latest report released on October 22, titled "China's Slow Bull Market is Forming," emphasizes that the investment logic in the Chinese stock market is undergoing a fundamental shift, transitioning into a longer-lasting and less volatile "slow bull" phase. The institution predicts that driven by earnings growth and valuation recovery, key Chinese indices, including A-shares and H-shares, could see an increase of approximately 30% by the end of 2027. This optimistic outlook is based on four pillars: a favorable policy environment, accelerated earnings growth, relatively cheap valuations, and strong domestic and foreign capital flows.
China Merchants Securities also expresses a positive long-term outlook for Hong Kong stocks, suggesting that as the supply-demand landscape improves, the Chinese economic cycle is likely to reach a turning point. The institution notes that following the commencement of interest rate cuts by the Federal Reserve, a resonance between "dual easing" policies in China and the U.S. will continue to attract southbound and foreign investments, driving long-term upward momentum in Hong Kong stocks and reinforcing the "slow bull" trend. This judgment aligns with Goldman Sachs' perspective, indicating a consensus among institutions regarding the future of Hong Kong stocks.
Ping An Securities provides an analysis of the attractiveness of Hong Kong stocks from a valuation perspective, noting that the industry concentration is high and the proportion of new economy sectors is continuously increasing, while current valuations are significantly lower than those in major global markets, displaying characteristics of "low PB, low PE." The institution believes that Hong Kong stocks' features of "low valuation, high dividends" will continue to attract stable capital allocations, especially for long-term investors, indicating a good investment value at current price levels.