Northbound Capital Trends | Northbound capital net purchases of 4.253 billion, Tencent receives additional investment, Li Auto faces sell-off after earnings

According to Zhitong Finance APP, on November 1st in the Hong Kong stock market, northbound capital had a net purchase of HKD 4.253 billion, with the Shanghai-Hong Kong Stock Connect net buying HKD 2.67 billion and the Shenzhen-Hong Kong Stock Connect net buying HKD 1.582 billion.

The stocks with the highest net purchases from northbound capital were Xiaomi Group-W (01810), Tencent (00700), and Sunac China (01918). The stocks with the highest net sales were Semiconductor Manufacturing International Corporation (00981) and Li Auto-W (02015).

Active trading stocks in Shanghai-Hong Kong Stock Connect

Active trading stocks in Shenzhen-Hong Kong Stock Connect

Tencent (00700) received a net purchase of HKD 551 million. On the news front, Tianfeng Securities pointed out that the product cycle of Tencent's gaming business is driving accelerated short-term revenue growth, and the advertising on video accounts may support the resilience of mid-term advertising revenue growth. The revenue growth of financial technology and enterprise services is expected to gradually recover with the macro environment, and the company's high gross margin incremental business lays the foundation for continuous improvement in mid-term gross margins. Coupled with a relatively stable competitive landscape, cautious expense spending can be maintained, and the ability to grow profits is relatively evident. Nomura also expects Tencent's total revenue in the third quarter to increase by 8% year-on-year; the non-International Financial Reporting Standards net profit in the third quarter is expected to increase by 23% year-on-year, as gross margins continue to expand.

Sunac China (01918) received a net purchase of HKD 87.29 million. On the news front, data from the CRIC Research Center shows that the top 100 real estate companies achieved a sales turnover of RMB 435.49 billion in October, a month-on-month increase of 73%, reaching the second-highest performance scale of the year; a year-on-year increase of 7.1%, marking the first month of positive year-on-year performance this year. In addition, the six major state-owned commercial banks announced that starting from November 1st, they will implement a new pricing mechanism for commercial personal housing loans, marking the formal implementation of the People's Bank of China's requirement to improve the loan interest rate pricing mechanism proposed a month ago.

Jinli Permanent Magnet (06680) received a net purchase of HKD 74.21 million. On the news front, on October 23rd, the Kachin Independence Army in Myanmar announced that it had taken control of the country's rare earth mining areas, and local rare earth mining has come to a halt. According to SMM, upstream miners reported that the situation has led to border closures, and Myanmar's rare earth mines are temporarily inaccessible to the domestic market Huatai Securities believes that the suspension of mining operations in Myanmar and the limited supply of medium and heavy rare earths in China due to environmental reasons may lead to a shortage in the supply-demand pattern of medium and heavy rare earths. If raw material inventories are depleted, prices for medium and heavy rare earths may see a significant increase. The supply-demand pattern for light rare earths will also improve, but domestic supply still has potential, and the degree of shortage may be weaker than that of medium and heavy rare earths.

CNOOC (00883) received a net buy of HKD 33.64 million. On the news front, according to media reports, Israeli intelligence indicates that Iran will launch attacks on Israel through its agents in Iraq, expected to occur before the U.S. elections. The international oil market has risen again, with WTI futures prices increasing by more than 3% and Brent crude oil futures prices rising by more than 2% after Thursday's settlement. Standard Chartered Bank pointed out that the air defense systems of Iran's energy infrastructure have been damaged, increasing the vulnerability of oil and gas facilities to future attacks, while the market seems to overlook this development or at least underestimate it.

Fourth Paradigm (06682) received a net buy of HKD 21.27 million. On the news front, Fourth Paradigm has reached a strategic cooperation with Ruisi Zhili to officially launch the enterprise-level AI computing power pooling platform RiseVAST, achieving platform management of hardware clusters, resource sharing, on-demand allocation, and rapid scheduling to fully unleash the potential of heterogeneous computing power. The AI computing power pooling platform RiseVAST is built on multiple technologies in the field of heterogeneous computing power, such as vGPU, and can effectively improve the utilization rate of AI computing resources and computing execution speed; it can save up to 80% in hardware costs and increase GPU comprehensive utilization by 5 to 10 times.

Alibaba-W (09988) received a net buy of HKD 21.23 million. On the news front, CICC released a report stating that Alibaba has recently implemented a series of measures to protect merchant rights, reduce merchant thresholds, and lower operating costs. They have relaxed the refund-only policy, launched the Return Treasure, and reduced merchants' return and refund costs. The experience score replaces the DSR rating system, and the integration of WeChat Pay brings new volume to merchants, encouraging them to serve users well. Additionally, CICC cited QuestMobile data, indicating that among WeChat's exclusive users, there are over 80 million high-frequency e-commerce users, believing that these groups, primarily consisting of lower-tier and elderly customers, are expected to become long-term user increments for Taobao, benefiting merchants.

Li Auto-W (02015) faced a net sell of HKD 147 million. On the news front, Li Auto announced its third-quarter results, with revenue of RMB 42.874 billion, an increase of 23.6% year-on-year and 35.3% quarter-on-quarter; net profit was RMB 2.82 billion, an increase of 0.3% year-on-year and 156.2% quarter-on-quarter. Morgan Stanley stated that Li Auto's third-quarter performance met expectations. Morgan Stanley mentioned that Li Auto's fourth-quarter sales guidance is between 160,000 to 170,000 units, a quarter-on-quarter increase of 5% to 11%, and higher than their forecast of 155,000 to 160,000 units, implying that annual sales will reach 502,000 to 512,000 units. Additionally, Li Auto expects total revenue in the fourth quarter to grow by 1% to 7% quarter-on-quarter, indicating an average selling price drop of 4%.

SMIC (00981) faced a net sell of HKD 253 million. On the news front, on October 28, the U.S. Treasury Department announced new investment restrictions targeting China's semiconductor and microelectronics, quantum information technology, and artificial intelligence sectors. These restrictions will officially take effect on January 2, 2025 Tianfeng Securities believes that the catalysts for this event include: the potential increase in international political instability is expected to raise market attention on the localization of equipment materials; domestic stimulus policies for the technology industry are likely to effectively drive the accelerated domestic substitution in the sector.

In addition, Xiaomi Group-W (01810), Geely Automobile (00175), and Meituan-W (03690) received net purchases of HKD 808 million, HKD 24.58 million, and HKD 10.2 million, respectively