Guosen: Hong Kong stocks plunged, who is selling?

Guosen released a research report stating that northbound funds may have seen a small net outflow in the past week, among which flexible foreign capital may have seen a small net inflow. On the Hong Kong stock market side, stable foreign capital inflow was HK$14.8 billion, flexible foreign capital inflow was HK$1.6 billion, and Stock Connect outflow was HK$11.8 billion. In the Asia-Pacific market, foreign capital flowed out of Japan and South Korea in the past week, and flowed out of India in September. In the US and European markets, capital flowed into Europe and the US in August. Guosen's main views are as follows: 1. A-shares: Northbound funds may have seen a small net outflow in the past week Northbound funds may have seen a small net outflow in the past week. During the trading days of the past week (2026/10/19-2026/10/23, same below), northbound funds were estimated to have a net outflow of RMB 5.6 billion, and the previous week (2026/10/12-2026/10/16, same below) was estimated to have a net outflow of RMB 14.2 billion. During the trading days of the past week, flexible foreign capital was estimated to have a net inflow of RMB 400 million, and the previous week was estimated to have a net outflow of RMB 6.8 billion. In addition, we aggregated the top ten active individual stocks on Stock Connect each day in the past week, among which Contemporary Amperex Technology (total two-way Stock Connect trading value this week was RMB 37.3 billion, accounting for 18% of the stock's trading value for the week, same below), Zhongji Innolight (RMB 17.3 billion, 9%), and Eoptolink Technology Inc., (RMB 11.6 billion, 8%) were relatively active in trading. 2. Hong Kong stocks: Hong Kong stocks plunged, who is selling? In the past week, total capital inflow into Hong Kong stocks was HK$3.8 billion. According to the holdings details data of the Hong Kong Exchanges and Clearing Central Clearing and Settlement System, in the past week (2026/10/14-2026/10/20), various types of capital totaled an inflow of HK$3.8 billion into the Hong Kong stock market, among which stable foreign capital inflow was HK$14.8 billion, flexible foreign capital inflow was HK$1.6 billion, Stock Connect outflow was HK$11.8 billion, and Hong Kong or mainland local capital outflow was HK$1.7 billion. At the industry level, in the past week foreign capital flowed more into hardware equipment, pharmaceuticals and biologics, semiconductors, etc., while Stock Connect flowed more into software services, non-bank financials, optional consumer retail, etc. Stable foreign capital in the past week mainly flowed into banks (HK$6.7 billion), optional consumer retail (HK$3.1 billion), and pharmaceuticals and biologics (HK$2.7 billion), and flowed out more from software services (-HK$5.1 billion), electrical equipment (-HK$1.6 billion), and non-ferrous metals (-HK$1.4 billion). Flexible foreign capital in the past week mainly flowed into hardware equipment (HK$4.9 billion), software services (HK$3.2 billion), and semiconductors (HK$2.3 billion), and flowed out more from banks (-HK$4.5 billion), non-bank financials (-HK$3.2 billion), and optional consumer retail (-HK$3.1 billion). Stock Connect in the past week mainly flowed into software services (HK$2.8 billion), non-bank financials (HK$1.9 billion), and optional consumer retail (HK$1.0 billion), and flowed out more from hardware equipment (-HK$6.3 billion), pharmaceuticals and biologics (-HK$2.9 billion), and banks (-HK$2.5 billion). 3. Other markets: Foreign capital flowed into Japan and out of South Korea in the past week Asia-Pacific market: Foreign capital flowed out of Japan and South Korea in the past week, and flowed out of India in September. In the Japanese stock market, as of the latest week on 10/12, overseas investors had a net outflow of JPY 343.5 billion from the Japanese stock market during the week, compared with an inflow of JPY 1,447.5 billion in the previous week, and a cumulative net inflow of JPY 20.8 trillion since 2023. In the South Korean stock market, as of 10/22, overseas investors had a net outflow of KRW 140 billion from the South Korean stock market during the week, compared with an outflow of KRW 11,397 billion in the previous week, and a cumulative net outflow of KRW 197.2 trillion since 2023. In the Indian stock market, in September overseas institutional investors flowed out of the Indian stock market by USD 3.75 billion, compared with an inflow of USD 3.10 billion in the previous month, and a cumulative net outflow of USD 25.9 billion since 2023. US and European markets: In August, capital flowed into Europe and into the US. In the US stock market, in August global mutual fund capital had a net inflow of USD 26.4 billion into the US equity market, compared with an inflow of USD 73.1 billion in the previous month, and a cumulative net inflow of USD 1,143.9 billion since 2020. In the European stock market, in August global mutual fund capital had net inflows into the UK, German, and French equity markets of USD 0.03 billion, USD 1.74 billion, and USD 2.46 billion, respectively, compared with USD -0.69 billion, USD -0.31 billion, and USD 0.02 billion in the previous month, respectively. Risk warning: Some capital data are estimates and may differ from the actual situation; the model is subject to the risk of misspecification and failure.