Despite recent volatility in the Hong Kong stock market, investment enthusiasm has remained strong this year, driving continuous expansion in Hong Kong stock fund sizes. A research report shows that as of the end of Q3, the scale of Hong Kong stock funds surpassed the trillion-yuan mark, reaching RMB 1,033.008 billion, a 67.98% increase compared to the end of Q2. (The above data is for illustrative purposes only and does not constitute investment advice. Funds carry risks; investors should exercise caution.)

Qu Shaojie, manager of the Great Wall Hong Kong Stock Connect Value Select Fund, believes that southbound capital, represented by public funds, has gradually become a key force supporting the Hong Kong market. The driving factors include significant valuation advantages, structural strengths of Hong Kong stocks, and the rising appeal of Chinese assets.

1. What are the key drivers behind the trillion-yuan expansion of Hong Kong stock funds? Qu Shaojie highlights three main factors: 1) **Valuation Advantage**: Hong Kong stocks remain undervalued globally. As of November 10, 2025, the Hang Seng Index's TTM P/E ratio stands at 11.97x, notably lower than Germany’s DAX (18.44x) and the UK’s FTSE 100 (20.23x). The dividend yield of 3.05% also outshines the S&P 500’s 1.11%, attracting sustained capital inflows. 2) **Structural Strengths**: Hong Kong’s market balances defensive and growth-oriented allocations, aligning with the barbell strategy. High-dividend blue chips (e.g., ~6% yields) suit defensive needs amid falling rates, while tech, biotech, and new-economy sectors offer exposure to innovation-led growth. 3) **Rising Appeal of Chinese Assets**: As a hub for China’s top firms, Hong Kong lists both quality growth and value stocks. With China’s economic recovery and tech breakthroughs, global and domestic investors increasingly seek to tap into its high-quality development, particularly in technology.

2. Tech, especially "Internet + AI" computing, dominates Hong Kong funds. What’s your take? Qu Shaojie notes that Hong Kong hosts China’s AI frontrunners, whose core technologies now compete globally. As AI drives the next tech revolution, China’s leadership potential in innovation and commercialization solidifies the sector’s long-term investment case.

**Other Key Sectors**: 1) **High-Dividend Stocks**: In a low-rate environment, these assets offer stable returns and potential capital appreciation. 2) **Biotech**: China’s biotech sector is transitioning from follower to innovator, with breakthroughs now licensed overseas—a historic shift. 3) **New Consumer Trends**: Hits like *Black Myth: Wukong* and pop culture IPs (e.g., Labubu) showcase China’s global cultural influence and market potential.

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