Looking to seize opportunities in the Hong Kong stock market? According to the latest Morgan Stanley research, stocks included in Southbound Trading hide golden investment opportunities! In recent years, southbound capital has evolved from an important participant in the Hong Kong stock market to become its core driving force. As southbound capital's pricing power increases, its impact on Hong Kong stocks will become increasingly profound, and this trend will continue to be supported by Hong Kong stocks' unique investment opportunities (such as internet and new consumption sectors) and long-term policy support. Looking back at history, stocks included in Southbound Trading often demonstrate strong performance even before inclusion. In the current list, capital attention is heating up for companies like UNISOUND (09678) and ZHOU LIU FU (06168).

**1. Southbound Trading Becomes Hong Kong Stocks' "Anchor" with Continuously Rising Influence**

In recent years, southbound capital has evolved from an important participant in the Hong Kong stock market to become its core driving force. Data shows that daily net southbound inflows account for over one-third of Hong Kong Exchange's main board trading volume, with holdings representing nearly 15% of Hong Kong stocks' free-float market capitalization - both indicators have grown by over 30% compared to pre-2024 levels.

More remarkably, cumulative net southbound inflows since 2025 have reached $14 billion, exceeding the total for all of 2024, with daily average inflows surging 84.6% year-over-year. As southbound capital's pricing power increases, its impact on Hong Kong stocks will become increasingly profound, and this trend will continue to be supported by Hong Kong stocks' unique investment opportunities (such as internet and new consumption sectors) and long-term policy support.

**2. Pre-Inclusion Stock Price "Hidden Rule": Early Positioning Yields Considerable Returns**

Looking back at history, stocks included in Southbound Trading often demonstrate strong performance even before inclusion:

30 days before inclusion: Average gain of 3.7%, outperforming Hang Seng Index by 5.2%, outperforming respective sectors by 5.6%

15 days before inclusion: Average gain of 1.6%, outperforming Hang Seng Index by 2.4%, with 59.7% of stocks outperforming their respective sectors

Among the 27 stocks included in February this year, 26 rose in the 30 days before inclusion, with 63% outperforming the broader market, achieving average absolute returns of 41% and relative returns versus Hang Seng Index of 19% - particularly impressive performance.

However, it should be noted that short-term performance may face pressure after inclusion, with 30-day average relative returns versus Hang Seng Index at -2.0%, but long-term (90-day) excess returns still reach 4.6%, demonstrating the long-term nature of capital positioning.

**3. Morgan Stanley's Exclusive Strategy: MSSBT Model Precisely Captures Opportunities**

Morgan Stanley has launched the Southbound Trading stock selection model (MSSBT), which precisely predicts inclusion lists by replicating official screening criteria and optimizing quality indicators:

Over the past 4 semi-annual inclusion cycles, the model achieved an average hit rate of 85%, with the August 2024 cycle reaching a hit rate of 97%

Simulated portfolio performance is outstanding: Under equal-weight allocation, average absolute returns 30 days before inclusion reached 10.1%, outperforming Hang Seng Index by 7.4%, even superior to actual included stocks' performance

The model's screening logic is rigorous, requiring passage through multiple tests including Hang Seng Composite Index constituent qualification (top 95% market value, turnover requirements, etc.), market capitalization exceeding HK$5 billion, while excluding high shareholding concentration and trust fund types, further reducing risk.

**4. September Potential Stock List Revealed, Healthcare and Industrial Sectors Lead**

The latest prediction suggests 19 stocks will be included in Southbound Trading in September, covering 7 major sectors, with healthcare (6 stocks) and industrial (5 stocks) accounting for over 50%, reflecting capital's growing attention to innovative drug R&D and high-end manufacturing (such as new energy batteries and automation).

The top five candidates by market capitalization include:

Caocao Mobility (02643) - Industrial sector Immuneonco Biopharmaceuticals (09606) - Healthcare Nanshan Aluminium International (02610) - Materials Zhengli New Energy (03677) - Industrial UNISOUND (09678) - Information Technology

Additionally, consumer sector's ZHOU LIU FU (06168), food and beverage sector's China Foods (00506), and others are also on the candidate list, covering multiple sub-sectors.

**5. Operating Guide: Maximizing Returns Through Strategic Positioning**

Entry Timing: Recommend entering positions 1 month before inclusion, aligning with capital's advance positioning rhythm

Holding Strategy: Equal-weight allocation across model-selected stocks to diversify risk

Profit-Taking Point: Sell on the official inclusion date of September 8 to lock in short-term gains