CMSC: Hong Kong stocks under pressure, expected to welcome year-end market rally with the easing of IPO pressure and profit recovery.

CMSC released a research report stating that the recent weakness in the Hong Kong stock market is due to the outflow of funds from the southbound investment as a result of the new regulations for public fund benchmarks returning to the A-share market, the crowding-out effect of collective investment behavior, concerns about the wave of IPO financing, the peak of stock lifting restrictions, profit downgrades, and the impact of overseas liquidity disturbances. Looking ahead, as southbound funds return and collective investment behavior weakens, IPO supply pressures and stock lifting restrictions are expected to temporarily ease. With profit recovery and the release of overseas liquidity, it is anticipated that the Hong Kong stock market will welcome a year-end rally. The report indicates that Hong Kong has seen the largest amount of IPO fundraising globally this year. The frequent issuance of IPOs in the Hong Kong stock market has put pressure on market liquidity and sentiment. Currently, there are still over 300 companies waiting to go public. Hong Kong Exchanges and Clearing Limited (00388), as a profit-driven institution, usually does not intervene in the pace of issuance. However, the recent poor performance of new stocks and quality issues in new stock applications have raised high concerns among regulators.