CMB International Securities: Expects Southbound long-term funds to increase by 1.54 trillion Hong Kong dollars by the end of next year, supporting the "slow bull" market of Hong Kong stocks.

The report from China Merchants Securities International points out that policies will continue to attract medium to long-term capital to invest in Hong Kong stocks. It is estimated that by the end of 2026, there will still be an additional space of 1.54 trillion Hong Kong dollars for southbound long-term funds, supporting a "slow bull" market in Hong Kong stocks. The bank believes that this year's surge in trading volume in Hong Kong stocks is mainly due to the continuous injection of mainland southbound funds. As of the end of the third quarter, net inflows of southbound funds reached 1.17 trillion Hong Kong dollars, accounting for 23.6% of the trading volume. The market value of southbound holdings in Hong Kong stocks has exceeded 6.3 trillion Hong Kong dollars, accounting for approximately 12.7% of the total market value of Hong Kong stocks, significantly enhancing the pricing power of Hong Kong stocks. The bank states that long-term funds from the north are increasingly becoming a key driving force for reshaping liquidity structure and optimizing valuation systems in the Hong Kong stock market. It is expected that optimization of the policy-level interconnection mechanism, relaxation of QDII restrictions, improvement of tax policies, listing of high-quality assets in Hong Kong, and encouragement of long-term investment by regulatory authorities will continue to attract medium to long-term capital to the south.