Bank of China International: It is recommended to pay attention to some active stocks in southbound trading, including Alibaba-W, etc

According to the Zhitong Finance APP, BOC International has released a Hong Kong stock strategy report, indicating that liquidity in the Hong Kong financial market remains ample, with trading volume in Hong Kong stocks increasing this year. As of June 18 this year, the average daily trading volume reached HKD 240.1 billion, significantly higher than HKD 110.8 billion during the same period last year and HKD 131.8 billion for the entire year of 2024. The Hang Seng Tech Index has cumulatively risen by 16.7% since 2025. The bank recommends that investors closely monitor some active stocks in southbound trading, including: Alibaba-W (09988), Meituan-W (03690), China Mobile (00941), Tencent Holdings (00700), SMIC (00981), and Li Auto-W (02015).

The bank stated that liquidity in the Hong Kong financial market is abundant, with the overnight interbank borrowing rate (HIBOR) close to zero. Despite rising geopolitical risks in recent months, the ample liquidity in the Hong Kong financial market helps stabilize the stock market and improve market sentiment. Since early May this year, the Hong Kong Monetary Authority has injected approximately HKD 128.9 billion in liquidity into the banking system through foreign exchange market operations, with the banking sector's surplus rising sharply from HKD 44.6 billion on May 2, 2025, to HKD 173.5 billion on June 18. Meanwhile, the overnight borrowing rate plummeted from 4.22% on May 2 to 0.01% on June 18, indicating extremely abundant liquidity in the Hong Kong financial market.

In addition, the Hong Kong initial public offering (IPO) market has thrived against the backdrop of rising market liquidity. According to WIND data, the total financing amount for IPOs in the Hong Kong stock market reached HKD 77.99 billion in 2025 to date, a year-on-year increase of 559.8%. Southbound trading recorded a net inflow of RMB 650.7 billion since 2025, a year-on-year increase of 104%.

The bank believes that the net inflow from southbound trading has performed robustly over the past few years, playing an important role in stabilizing the Hong Kong stock market amid escalating geopolitical risks. As of June 18, 2025, southbound trading recorded a net inflow of RMB 650.7 billion against the backdrop of anticipated economic recovery and rising geopolitical risks, far exceeding RMB 318.2 billion during the same period last year. Southbound trading plays a key role in improving investment sentiment and uncovering investment opportunities in the Hong Kong stock market. Over the past decade, mainland-related companies have gradually gained a dominant position in the Hong Kong stock market. According to data from the Hong Kong Stock Exchange, as of the end of May 2025, stocks of mainland-related companies accounted for 81.01% of the total market capitalization and 91.04% of the total trading volume. Since 2025, southbound trading has accounted for 21.8% of the average daily trading volume in Hong Kong, higher than 17.3% in 2024, 14.1% in 2023, and 11.8% in 2022.

The bank advises investors to closely monitor some active stocks in southbound trading. Looking ahead, BOC International expects that strong demand from investors for Hong Kong-listed stocks through southbound trading will continue throughout 2025, due to more high-quality technology/high-end manufacturing stock options, attractive valuations in the Hong Kong stock market, and high dividend yields. The bank anticipates that net inflows from southbound trading in Hong Kong will reach RMB 1.2 trillion this year, higher than RMB 744 billion in 2024 and RMB 289.4 billion in 2023. The bank believes that the mainland-Hong Kong stock connectivity mechanism will be a key driver for the long-term potential re-rating of the Hong Kong market Investment behavior data from 2025 to date shows that southbound investors are focused on the internet, telecommunications, semiconductor, and automotive manufacturing industries