Northbound funds | Northbound trading recorded a net sell of RMB2.075 billion. Northbound funds added positions in domestic large models while selling off AI hardware stocks and CNOOC (00883) throughout the day.

On October 26 in the Hong Kong stock market, northbound trading recorded a net sell of HK$2.075 billion. Among this, Hong Kong Stock Connect (Shanghai) recorded a net sell of HK$732 million, and Hong Kong Stock Connect (Shenzhen) recorded a net sell of HK$1.344 billion. The stocks with the largest net purchases by northbound funds were Z.AI (02513), BIDU-W (09888), and UBTECH ROBOTICS (09880). The stocks with the largest net sells by northbound funds were BABA-W (09988), CNOOC (00883), and Semiconductor Manufacturing International Corporation (00981). Active stocks under Hong Kong Stock Connect (Shanghai) Active stocks under Hong Kong Stock Connect (Shenzhen) Z.AI (02513) and MINIMAX-W (00100) received net purchases of RMB431 million and HK$73.5 million, respectively. China Securities Co.,Ltd. pointed out that following the intensive upgrades of core overseas models in September-October, domestic models will also usher in a relatively intensive round of iterative upgrades in Q4. It looks forward to subsequent releases such as GLM5.5, M3Pro, and K3.1. CITIC SEC released a research report stating that although the current market attitude toward large models has become more cautious, it remains firmly bullish on the long-term commercial value and valuation growth space of Chinese and U.S. models. BIDU-W (09888) received a net purchase of HK$265 million. Daiwa published a research report stating that Baidu's AI cloud infrastructure business growth will accelerate significantly, with third-quarter revenue expected to grow by about 90% year on year, far above the approximately 50% growth rate in the second quarter, mainly driven by strong demand for GPU computing power and an increase in large external customers adding AI training and inference workloads, with more customers signing multi-year contracts and prepaying to lock in GPU capacity. UBTECH ROBOTICS (09880) received a net purchase of HK$141 million. On October 22, UBTECH ROBOTICS signed a memorandum of understanding with the Brussels-based international association China-Europe Digital Association to deepen cooperation in the European Siasun Robot&Automation market. The two parties will jointly explore business opportunities in key European markets, focusing on manufacturing, logistics, and other industrial and commercial sectors, and promote humanoid Siasun Robot&Automation to improve production efficiency and optimize operations. Tencent (00700) and BABA-W (09988) recorded net sells of HK$174 million and HK$602 million, respectively. Shenwan Hongyuan Group said that the recent significant divergence between the performance of Hang Seng Tech and U.S. software stocks may be related to valuation constraints brought by rising U.S. Treasury yields and differences in profit expectations for the technology sectors in the two places. 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. AI hardware stocks were sold off again, with KB LAMINATES (01888), YOFC (06869), and Semiconductor Manufacturing International Corporation (00981) recording net sells of HK$88.13 million, HK$192 million, and HK$314 million, respectively. Nomura's latest report said AI capital expenditure is caught in a dilemma. If hyperscaler capital expenditure continues to accelerate, the market will focus heavily on the continued depletion of free cash flow and further question the sustainability of overall financing; if hyperscaler capital expenditure slows materially, the AI trade will face a more severe shock. CNOOC (00883) recorded a net sell of HK$504 million. Citi said the normalization of crude oil exports from the Arabian Gulf is mainly reflected in volumes rather than logistics, and unprecedented shipping inefficiency has kept landed crude oil costs elevated. The freight rate for very large crude carriers (VLCCs) from the Arabian Gulf to China has recently approached US$250 per ton, equivalent to about US$35 per barrel, more than 20 times the average level of the past decade.