Northbound funds | Northbound trading saw a net sell-out of 6.105 billion yuan, prompting a nearly 85% cliff-style plunge in Geo Energy Resources Limited (02477). Northbound investors seized the opportunity to buy over 1.2 billion Hong Kong dollars on dips.

On May 21, the Hong Kong stock market saw a net sell-off of 6.105 billion Hong Kong dollars by the Northbound funds. Among them, the net sell-off through the Shanghai-Hong Kong Stock Connect was 1.26 billion Hong Kong dollars, while the net sell-off through the Shenzhen-Hong Kong Stock Connect was 4.845 billion Hong Kong dollars. The stocks with the highest net buys by Northbound funds were WELLCELL H-NEW (02477), Semiconductor Manufacturing International Corporation (00981), and CNOOC Limited (00883). The stocks with the highest net sells by Northbound funds were TRACKER FUND OF HONG KONG (02800), BABA-W (09988), and Tencent (00700). Active trading stocks through Shanghai-Hong Kong Stock Connect were WELLCELL H-NEW (02477) which saw a sharp drop of almost 85%, with Northbound funds taking the opportunity to buy 1.24 billion Hong Kong dollars. On the news side, in March of this year, Wingtech Technology announced plans to implement a "1 for 4" stock split. On May 4th, the company officially started the stock split trading. This split coincides with adjustments to the inclusion process in the Hong Kong Stock Connect. On May 6th, the Shanghai and Shenzhen stock exchanges announced the inclusion of Wingtech Technology (new) in the Hong Kong Stock Connect. On May 11th, the company adjusted the use of funds raised; on May 15th, the company announced its formal entry into the AI computing power service field, including computing power rental platforms, computing power scheduling and optimization platforms, and Token aggregation APIs. In the chip sector, Semiconductor Manufacturing International Corporation (00981) saw a net buy of 805 million, while HUA HONG SEMI (01347) saw a net sell-off of 257 million Hong Kong dollars. On the news side, Morgan Stanley pointed out that TSMC and Samsung are integrating mature process capacity, creating opportunities for secondary wafer foundries. The report believes that the mature process upcycle is imminent. As AI infrastructure construction may continue for another two years, some smartphone/PC customers are now beginning to worry about a shortage of mature process capacity. The bank expects a shortage of mature process capacity to occur in the second half of 2027. CNOOC Limited (00883) saw a net buy of 425 million Hong Kong dollars. In terms of news, Goldman Sachs stated that in May, the average daily decrease in visible crude oil inventories has reached 8.7 million barrels, nearly double the average decrease since the outbreak of the conflict. The IEA indicated in its monthly oil market report that global observed oil inventories decreased rapidly in March and April by 246 million barrels. According to the Energy Agency's calculations, even if the Middle East conflict can be quickly resolved, the oil market will still face a severe supply shortage before October. Tencent (00700) and BABA-W (09988) saw net sell-offs of 1.084 billion and 1.526 billion Hong Kong dollars respectively. On the news side, leading domestic cloud service providers collectively raised capital expenditure guidance, with Tencent's first quarter 2026 capital expenditure reaching 31.94 billion yuan, a year-on-year increase of 16%, and is expected to significantly increase investment in the second half of the year with the delivery of domestically produced chips; Alibaba's capital expenditure in the same period was 26.887 billion yuan, an increase of 9.24% year-on-year; Alibaba's CEO mentioned that the current server utilization rate is close to saturation, and future spending may far exceed the original target of 380 billion yuan over the next five years. In addition, ByteDance has increased its annual capital expenditure to over 200 billion yuan. TRACKER FUND OF HONG KONG (02800) saw a net sell-off of 2.474 billion Hong Kong dollars. In terms of news, Soochow believes that in the short term, Hong Kong stocks are under pressure due to overseas factors, but there is still long-term value for allocation. The surge in US bond yields is affecting the performance of Hong Kong stocks in the short term. The 10-year and 30-year US bond yields have broken through 4.5% and 5% respectively, entering the alert zone and may affect the technology growth trend in the short term. The US NACHO transaction continues, combined with the latest US inflation data exceeding expectations, the market is gradually pricing in long-term inflation. Whether oil prices will fall in late May is crucial. In addition, Montage Technology (06809) and YOFC (06869) saw net sell-offs of 42.14 million and 262 million Hong Kong dollars respectively.