Beishui Trends | Beishui net sold 0.76 billion, domestic investors continue to increase their holdings in domestic bank stocks while selling Tencent and HKEX

According to the information from Zhitong Finance and Economics APP, on July 24th, in the Hong Kong stock market, Beishui (Northbound funds) had a net selling of HKD 76 million. Among them, the Shanghai-Hong Kong Stock Connect had a net buying of HKD 511 million, while the Shenzhen-Hong Kong Stock Connect had a net selling of HKD 587 million.

The top three stocks with the highest net buying by Beishui were Industrial and Commercial Bank of China (01398), Sinopec Corp. (00386), and China Construction Bank (00939). The top three stocks with the highest net selling by Beishui were Tencent Holdings (00700), Hong Kong Exchanges and Clearing (00388), and Great Wall Motor (02333).

Active trading stocks in the Shanghai-Hong Kong Stock Connect

Active trading stocks in the Shenzhen-Hong Kong Stock Connect

Industrial and Commercial Bank of China (01398) and China Construction Bank (00939) had a net buying of HKD 324 million and HKD 131 million respectively. On the news front, the People's Bank of China announced a reduction in the 7-day reverse repurchase rate and the LPR quotation rate on July 22. Huafu Securities pointed out that overall, the rate cut is positive for the banking sector. Although statically, the rate cut has a negative impact on bank interest margins, the magnitude is relatively controllable and within market expectations. However, in the medium to long term, the rate cut will help boost credit demand, improve economic expectations, and thus benefit the fundamentals of banks. Some institutions also believe that against the backdrop of stabilizing net interest margins of banks and the market-oriented adjustment of deposit rates, bank deposit rates are expected to see a new round of cuts.

There was differentiation in oil stocks, with Sinopec Corp. (00386) receiving a net buying of HKD 165 million, while CNOOC (00883) suffered a net selling of HKD 619.1 million. On the news front, Xingzheng Futures pointed out that the weak demand for refined oil products last week, combined with the easing of the situation in the Middle East, drove oil prices lower. However, last night's API crude oil inventory exceeded expectations, showing slight improvement. Considering that OPEC+ still has room for production cuts in the third quarter, the fundamental outlook for crude oil is not pessimistic, with support for tight supply still present. Everbright Securities stated that with the tense geopolitical situation in the Middle East and the expected tightening of oil supply and demand under OPEC+, they are optimistic about oil prices remaining high. The "Big Three" oil companies have shown strong performance resilience during oil price fluctuations, and their profit centers are expected to further rise China Resources Beer (00291) received a net buy of HKD 38.35 million. On the news front, Goldman Sachs believes that the beer market is currently facing headwinds in the short term, with beer stock profit forecasts for 2024 to 2026 being lowered by 1% to 11% to reflect weak consumption trends. China Merchants Securities stated in a report that it expects China Resources Beer's half-year performance to be flat, but profit margins are still growing due to efficiency. They believe that the potential good replenishment momentum in the peak season proves the "buy" rating is reasonable, and that the stock price has already digested the first half-year performance. Signs of demand recovery appeared at the beginning of July; trends are yet to be confirmed.

Li Auto-W (02015) faced a net sell of HKD 41.59 million. On the news front, West Securities pointed out that the market believes that Li Auto's previous success was mostly due to incidental factors, and there is skepticism about its subsequent product strength. We believe that the success of Li Auto's extended-range SUV comes from the resonance of both the demand side and the supply side, demonstrating the company's ability to grasp user demand and create high-quality products. Based on this, we believe that Li Auto's subsequent products are expected to replicate the success of the L series, and the pure electric new car is also expected to sell well. GF Securities believes that Li Auto still has a high growth confidence.

Hong Kong Exchanges and Clearing Limited (00388) faced a net sell of HKD 172 million. Citigroup released a research report stating a "sell" rating for HKEX, lowering earnings forecasts per share for the fiscal years 2024 to 2026 by 1% to 3% to reflect the downward revision of daily average turnover forecasts, with the target price lowered from HKD 240 to HKD 230. It is also expected that the company's second-quarter performance will be good but the growth prospects are uncertain. Due to the market sentiment weakening again, the daily average turnover since July has been around HKD 100 billion. UBS stated that ADT has slowed down from its peak in May, falling to around HKD 99 billion since July, compared to HKD 140 billion in May. It is predicted that the second half of the year will be roughly the same as the first half in terms of ADT, with a year-on-year increase on a low base.

Tencent Holdings Limited (00700) faced a net sell of HKD 248 million. Morgan Stanley released a research report stating that the bank expects the company's second-quarter revenue and adjusted operating profit to increase by 7% and 25% year-on-year respectively. With the success of the "DNF" mobile game, they are optimistic about the prospects of the domestic gaming business, while advertising growth should remain strong and gross profit margins should continue to expand. Tencent's stock buyback volume in the second quarter was more than twice the amount sold by major shareholder Prosus, and is expected to achieve its goal of repurchasing over HKD 100 billion in the fiscal year 2024. It is worth noting that according to Tencent Holdings' announcement, the company will release its interim results on August 14th, with the previous month being a quiet period, and July 12th being the last day of Tencent's current buyback phase.

In addition, China Mobile (00941) and Great Wall Motor (02333) faced net sells of HKD 114 million and HKD 160 million respectively