Founder's outlook on Hong Kong stocks in November: External disturbances are unlikely to change the slow bull market trend.

Founder released a research report stating that in October, the main indexes of the Hong Kong stock market as a whole experienced a slight correction, mainly due to the resurgence of Sino-US trade tensions at the beginning of October. From the trend of the market, after a brief adjustment at the beginning of the month, the Hong Kong stock market rebounded, and the company believes that the upward trend of Hong Kong stocks is not over yet, presenting a good opportunity for positioning after the previous adjustment. The company believes that the current fundamentals of the Chinese economy are stable and making progress, with strong resilience, and continuously releasing policy benefits, resulting in a significant increase in confidence in A shares and the Hong Kong stock market. In addition, the continued acceleration of southbound funds flowing into the Hong Kong stock market, combined with the Federal Reserve's interest rate cut cycle, suggests that the liquidity environment of the Hong Kong stock market is expected to benefit further. The main points of Founder are as follows: 1. Review of the Hong Kong stock market in October: External disturbances led to a market correction In October, the Hong Kong stock market experienced a slight correction due to external factors such as tariffs, with major broad-based indices showing varying degrees of decline. The Hang Seng Technology Index fell by 8.6%, the Hang Seng Index by 3.5%, the Hang Seng Composite Index by 3.9%, and the Hang Seng Enterprise Index by 4.0%. In terms of industry performance, most primary industries in the Hong Kong stock market experienced slight declines in October. Utilities, finance, and materials industries performed relatively well, while healthcare, information technology, and daily consumption industries lagged behind. The AH stock premium index in October saw a slight increase. Since the beginning of the year, the company observed a decline in the AH stock premium index. As of October 31st, the AH stock premium index recorded 120, up by 2.2% compared to the end of September at 117, currently at the 9.7% percentile level since 2016 from the lowest level upwards. 2. Main index valuation levels slightly decrease In October, the valuation levels of the main Hong Kong stock indexes slightly decreased. As of October 31st, the PE valuation level of the Hang Seng Index was 11.7, at the 75.0% percentile level since 2016 from the lowest level upwards. The PE valuation level of the Hang Seng Enterprise Index was 10.5, at the 87.4% percentile level since 2016. The PE valuation level of the Hang Seng Technology Index was 22.9, at the 28.6% percentile level since the available data in 2020. In terms of industry valuation levels, the valuation levels of industries such as utilities, optional consumption, and daily consumption are still at historically low levels. As of October 31st, the PE valuation levels of the Hong Kong utilities index were 12.3, at the 16.1% percentile level since 2016 from the lowest level upwards. The PE valuation levels of the optional consumption and daily consumption indexes were 22.8 and 23.8, at the 34.3% and 21.7% percentile levels since 2016 from the lowest level upwards, respectively. 3. Continuous record high inflow of southbound funds In October, foreign capital outflow in the Hong Kong stock market slowed down. Due to easing Sino-US trade tensions in May, foreign capital briefly turned into net inflows in the Hong Kong stock market, with a slight inflow of 21.1 billion Hong Kong dollars that month. However, starting in June, foreign capital turned back into net outflows, with foreign capital outflows of 66.9 billion Hong Kong dollars in October, a slight slowdown compared to the previous month. In terms of trends, there has been no turning point in the outflow trend of foreign capital in the Hong Kong stock market. In October, southbound funds continued to flow significantly into the Hong Kong stock market, with the annual cumulative inflow scale exceeding 1.1 trillion yuan. According to the latest data, as of October 31st, the cumulative monthly net inflow scale of southbound funds in October was 84.9 billion yuan. Looking at the whole year, as of the end of October, the cumulative inflow scale of southbound funds into the Hong Kong stock market this year has reached 1,169.1 billion yuan, a record high in recent years.