CICC: Southbound funds tend to hold high-quality stocks, and the performance of the four major active quantitative strategies is excellent.

Zhongjin released a research report stating that by 2025, the overall trend of the Hong Kong stock market is upward, with mainstream indexes achieving significant gains, demonstrating the vitality of the Hong Kong stock market and the optimism of investors. Zhongjin calculates the factor exposure of southbound funds based on the amount of stock held through the Hong Kong stock connect in a weighted manner. Southbound funds maintain stable exposure to quality style, tending to hold high-quality stocks. In addition, in the past three years, the exposure of southbound funds to undervalued and high dividend stocks has also marginally improved. The performance of the four major active quantitative strategies in the Hong Kong stock market is excellent, with the Hong Kong stock value strategy constructed within the scope of the Hong Kong stock connect achieving an annualized return of 15.6% since 2016, compared to an annualized excess return of 11.4% for the Hang Seng Hong Kong stock connect index. The Hong Kong dividend strategy has also achieved an annualized return of 12.0% and an annualized excess return of 5.1% since 2018. The Hong Kong quality strategy has a relatively stable positive excess return compared to the Hang Seng Hong Kong stock connect index, achieving an annualized return of 16.2% since 2016, with an annualized excess return of 12.3%. The Hong Kong growth strategy has achieved an annualized return of 17.1% since 2016, with a return of 47.2% this year, and relatively stable excess returns compared to the Hang Seng Hong Kong stock connect index, overall performing well compared to the Hang Seng Technology Index.