HAITONG INT'L: Hong Kong stock market becomes immune to oil price shocks as AI hardware emerges as the main trading trend.

Haitong International released a research report stating that this week, the southbound funds turned into a net inflow of HK$16.8 billion, with the transaction volume of southbound funds accounting for 21.4%. At the industry level, during the period from 4/16 to 4/22, net inflows continued in the information technology and financial sectors, with banks, technology hardware, and semiconductors leading the inflow; innovative drugs and communication services (mainly driven by China Mobile Limited) also received net inflows; the inflow in the energy sector expanded further, while the metal sector saw outflows. At the individual stock level, during the period from 4/20 to 4/24, CNOOC's net inflow continued to expand to HK$2.3 billion, Tencent saw a net outflow of HK$1.4 billion, Alibaba's net outflow increased to HK$2.4 billion, Semiconductor Manufacturing International Corporation experienced a net outflow of HK$0.7 billion after continuous growth, and Yangtze Optical Fibre And Cable Joint Stock continued to see a net outflow of HK$0.1 billion. Liquidity data With the uncertainty of the change of leadership in the Federal Reserve, the market's expectation of a more dovish policy in the future has increased. At the same time, the prospect of the US and Iran returning to negotiations has led to a decline in Middle East risk premiums, and the US dollar index fell significantly by 0.3% on the day. The US dollar rose by 0.27% against the offshore renminbi to 6.83 throughout the week. This week saw a rise in the passage risk in the Hormuz Strait, which drove the continuous rise in crude oil prices. Brent crude oil rose by 17.2% to $105.9 per barrel for the week, while WTI crude oil rose by 14.9% for the week. Precious metal prices remained under pressure, with gold falling by 3.2% to $4725 per ounce, and silver falling by 7.5% to $75.7 per ounce for the week. On Friday, the US Department of Justice decided to end its investigation into Federal Reserve Chairman Powell, improving market expectations of easing prospects and pushing US bond yields lower. However, the yield on the 10-year US bond still rose by 5.6 basis points to 4.30% for the week. The 10-year Chinese bond yield fell slightly by 3.6 basis points to 1.74% for the week. In the A-share market this week (4/20-4/24), margin financing funds continued to see a net inflow of 53.2 billion yuan, almost offsetting the outflow earlier this year. In terms of ETFs, broad-based ETFs continued to see significant outflows of 68.9 billion yuan, while industry-specific ETFs saw a net outflow of 8.3 billion yuan. Within the technology sector, communication and 5G ETFs saw net inflows of 5 billion and 0.9 billion yuan, while semiconductor, chip, artificial intelligence, and Siasun Robot&Automation saw net outflows of 2.7 billion, 3.8 billion, 1.6 billion, and 1.9 billion yuan. Satellite, power equipment, and battery ETFs saw continued net inflows of 2.3 billion, 1.0 billion, and 1.3 billion yuan. Overall short selling in the Hong Kong stock market fell to 19%, while the short selling ratio in the Hang Seng Technology Index rose to 21%, and the short selling ratio in NETDRAGON Mutual Funds rose to 20%. In terms of individual stocks, the short selling ratios for Meituan, JD.com, Alibaba, and Baidu increased to 33.3%, 35.6%, 16.8%, and 42.9%, respectively, compared to the previous week. Tencent and NetEase saw their short selling ratios decrease to 16.2% and 16.5% compared to the previous week. The one-year rolling percentiles for Meituan, JD.com, Baidu, Tencent, and Alibaba increased to 95.2%, 93.7%, 91.7%, 75.4%, and 65.9%, respectively. Southbound funds turned into a net inflow of 16.8 billion Hong Kong dollars this week, with the transaction volume of southbound funds accounting for 21.4%. At the industry level, during the period from 4/16 to 4/22, net inflows continued in the information technology and financial sectors, with banks, technology hardware, and semiconductors leading the inflow; innovative drugs and communication services (mainly driven by China Mobile Limited) also received net inflows; the inflow in the energy sector expanded further, while the metal sector saw outflows. At the individual stock level, during the period from 4/20 to 4/24, CNOOC's net inflow continued to expand to 23 billion Hong Kong dollars, Tencent saw a net outflow of 14 billion Hong Kong dollars, Alibaba's net outflow increased to 24 billion Hong Kong dollars, Semiconductor Manufacturing International Corporation experienced a net outflow of 7 billion Hong Kong dollars after continuous growth, and Yangtze Optical Fibre And Cable Joint Stock continued to see a net outflow of 1 billion Hong Kong dollars. Domestic funds continued to see net inflows in Hong Kong stock-connect ETFs, with a net inflow of 1.6 billion Hong Kong dollars this week, of which innovative drugs, technology, and dividends saw net inflows of 3.1 billion, 0.6 billion, and 0.4 billion yuan, while finance and consumption saw net outflows of 2 billion and 0.2 billion yuan. Innovative drugs have seen significant inflows of 7.7 billion for the fourth consecutive week; since the beginning of 2026, the entire market, technology, innovative drugs, and consumption sectors have seen net inflows of 53.8 billion, 62.4 billion, 12.7 billion, and 0.7 billion yuan, while dividends and finance sectors have seen net outflows of 9.5 billion and 5 billion yuan. From a funding perspective, this week (4/16-4/22), foreign funds in Hong Kong stocks turned into a net inflow of 1.1 billion Hong Kong dollars, with a cumulative net outflow of 10 billion Hong Kong dollars since the beginning of the year. Mainland Chinese intermediaries and Hong Kong local intermediaries saw net inflows of 0.5 billion and 15.8 billion Hong Kong dollars, respectively, with cumulative net inflows of 1.2 billion and 36.3 billion Hong Kong dollars since the beginning of the year. This week, the market value of unlocked shares in the Hong Kong stock market reached 5.2 billion Hong Kong dollars, with an expected unlock of 11.7 billion Hong Kong dollars next week. Since the beginning of 2026, the cumulative unlock amount in the Hong Kong stock market has been 262.8 billion Hong Kong dollars. The daily chart of the S&P 500 industry shows that technology leads in profit improvements after the ceasefire, rebounding towards optional consumption and communication spreading. Northbound funds increased their allocation in the first quarter of 26 to communication and power equipment, while non-ferrous metals switched from a significant inflow in the fourth quarter of 25 to a notable outflow. The decline in Chinese residents' deposits and the increase in non-bank deposits continue to transform into incremental funds for the stock and bond markets. Fund holdings in the first quarter: increased in communication, power equipment, decreased in electronics, non-ferrous metals. Current global M&A upcycle: the US leads in scale, with China and Japan accelerating.