[Zhenzhuo Institutional View] US stocks see capital outflow from high-valuation tech stocks; Southbound Stock Connect records net inflow of HK$13.37 billion on Wednesday

U.S. stocks showed significant capital rotation, with the focus on profit-taking in high-valuation tech stocks. Despite chip giant AMD's better-than-expected earnings, its weak guidance combined with market concerns that AI applications could disrupt traditional software business models triggered capital outflows from crowded tech sectors into defensive sectors like healthcare and industrials. On the macro front, the unexpectedly weak ADP employment data indicated a cooling labor market, theoretically reinforcing the Fed's path to rate cuts.

Southbound Stock Connect recorded a net inflow of HKD 13.37 billion on Wednesday, with $TENCENT(00700.HK) seeing the largest net inflow at HKD 2.23 billion, followed by $BABA-W(09988.HK) ; $SMIC(00981.HK) recorded the largest net outflow at HKD 707 million, followed by Hua Hong Semiconductor (01347.HK).

Source: KGI Securities