Northbound funds | Northbound trading recorded a net sell of 92.18 billion. Domestic funds continued to reduce holdings in AI hardware stocks, selling off Alibaba (09988) for nearly HK$1.7 billion.

On October 22 in the Hong Kong stock market, northbound trading recorded a net sell of HK$9.218 billion. Among this, Stock Connect (Shanghai) recorded a net sell of HK$3.225 billion, and Stock Connect (Shenzhen) recorded a net sell of HK$5.993 billion. The stocks with the largest net buying by northbound funds were Tencent (00700), Realord Group Holdings (01196), and CSOP Hang Seng TECH Index ETF (03033). The stocks with the largest net selling by northbound funds were BABA-W (09988), Semiconductor Manufacturing International Corporation (00981), and Hua Hong Grace Semiconductor (01347). Active stocks traded via Stock Connect (Shanghai) Active stocks traded via Stock Connect (Shenzhen) Tencent (00700) and CSOP Hang Seng TECH Index ETF (03033) received net buying of HK$489 million and HK$192 million, respectively, while BABA-W (09988) suffered a net sell of HK$1.676 billion. Shenwan Hongyuan Group issued a research report stating that the recent significant divergence between the performance of the Hang Seng TECH Index and U.S. software stocks may be related to valuation constraints brought by rising U.S. Treasury yields and differences in earnings expectations between the two tech sectors. In the future, if the numerator side dominates, U.S. software stocks may converge toward Hang Seng TECH; if the denominator side dominates, as interest rate constraints ease, Hang Seng TECH is expected to move closer to U.S. software stocks. KB LAMINATES (01888) and YOFC (06869) suffered net sells of HK$189 million and HK$382 million, respectively. Meta raised its full-year 2026 capital expenditure forecast to US$135 billion to US$145 billion; Tesla, on the other hand, lowered its full-year 2026 capital expenditure target from more than US$25 billion to about US$20 billion, a reduction of about 20%. Founder previously pointed out that the continued expansion of capital expenditure by cloud vendors is an important support for this round of AI hardware rally, but the increase in investment scale and the rise in stock prices are not always synchronized. Whether the market expectation that the growth rate of cloud vendors' capital expenditure has peaked in this round holds true may have significant guiding significance for the sustainability of the AI hardware stock rally in the future. Hua Hong Grace Semiconductor (01347) and Semiconductor Manufacturing International Corporation (00981) suffered net sells of HK$423 million and HK$910 million, respectively. CLSA previously stated that wafer foundries, driven by AI-related chip demand, the return of overseas orders, and domestic manufacturing, are maintaining high capacity utilization rates, with average selling prices continuing to rise quarter on quarter, but investment in new capacity and increased depreciation of advanced processes will constrain margin improvement. Goldman Sachs stated that to reflect the integration of HLMC under Hua Hong Grace Semiconductor, it cut net profit for fiscal years 2026 to 2027 by 5% and 2%, and raised it by 3% for 2028. In addition, Realord Group Holdings (01196) received net buying of HK$251 million. CNOOC (00883) suffered a net sell of HK$227 million.