【Yuan Zhifeng Column】Northbound Funds Record Third Consecutive Day of Net Selling in Hong Kong Stocks

Stock Recommendation Today - NetEase (9999, $191), Target Price $210, Stop-Loss Price $182

1) Market Outlook

Hong Kong stocks rose on Monday with flat trading volume, while southbound funds recorded net selling for the third consecutive day. The market is expected to consolidate in the short term, and investors are advised to buy on dips.

2) Summary of Monday's China and Hong Kong Market Conditions

The Hang Seng Index opened 31 points higher on Monday, continued to climb, and reached a high of 25,277 points—up 314 points, marking a monthly high—during the afternoon session. It pulled back slightly at the close, ending at 25,207 points, up 244 points or 1.0%. Turnover remained flat at approximately HK$210.5 billion. The daily average turnover in June was HK$319 billion.

Southbound funds via the Stock Connect program recorded net selling of about HK$1.6 billion. Meituan (3690), Zhipu (2513), and Kingboard Laminates (1888) saw net buying of HK$1.22 billion, HK$620 million, and HK$610 million respectively. Xiaomi (1810), SMIC (981), and Alibaba (9988) experienced net selling of HK$1.23 billion, HK$700 million, and HK$680 million respectively. Cumulative net buying since July has reached approximately HK$80 billion, compared to HK$27.1 billion in June.

The Hang Seng Index rose 1.0%, with 70 gainers, 22 decliners, and 1 unchanged among its constituents. Xiaomi (1810), Galaxy Entertainment (27), and Lao Pu Gold (6181) surged over 7%, 6%, and 5% respectively, leading the blue chips. Ctrip (9961), Sands China (1928), Henderson Land (12), and Chow Tai Fook (1929) rose over 3%. China Construction Bank (939), CATL (3750), Pop Mart (9992), Budweiser APAC (1876), Wheelock Properties (1997), Hang Lung Properties (101), and Hengan International (1044) gained over 2%. PetroChina (857) fell over 3%, the worst performer among blue chips. CSPC Pharmaceutical (1093) and China Resources Beer (291) declined over 2%. CNOOC (883), China Biologic (1177), WuXi Biologics (2269), Geely Auto (175), and China Resources Power (836) dropped over 1%.

The Hang Seng Tech Index rose 1.6%, closing at 4,702 points, with 23 gainers, 6 decliners, and 1 unchanged. Large tech stocks generally rose: Tencent (700), NetEase (9999), and Kuaishou (1024) gained over 1%, Meituan (3690) rose 3%, and Xiaomi (1810) surged over 7%. Minimax (100) jumped over 17%, the biggest gainer among constituents. Horizon Robotics (9660) rose over 4%. Ctrip (9961), Zhipu (2513), and Tencent Music (1698) gained over 3%. Tongcheng Travel (780), Leapmotor (9863), Bilibili (9626), SenseTime (20), JD Health (6618), and Alibaba Health (241) rose over 2%. NIO (9866) and XPeng (9868) fell over 1%, the worst performers.

By sector, AI, aviation, Macau gaming, and tourism stocks outperformed the broader market. Minimax (100) surged over 17%, Zhipu (2513) and SenseTime (20) rose over 3% and 2% respectively. China Southern Airlines (1055) rose over 6%, while China Eastern Airlines (670) and Air China (753) gained over 5%. Galaxy Entertainment (27) rose over 6%, MGM China (2282) and Wynn Macau (1128) over 4%. Ctrip (9961) and Tongcheng Travel (780) rose over 3% and 2% respectively.

Power, oil, and coal stocks declined. China Power (2380) fell over 3%, while China Resources Power (836) and Huaneng Power (902) dropped over 1%. PetroChina (857) and CNOOC (883) fell over 3% and 1% respectively. China Coal Energy (1898) and Yankuang Energy (1171) declined over 1%.

On Monday, the Shanghai Composite Index opened down 0.1%, briefly fell 0.5% in early trading, then reversed to rise, closing near its intraday high at 3,858.25 points, up 1.2%. The Shenzhen Component Index rose 2.7%. The STAR 50 Index gained 1.2%. Total turnover in Shanghai and Shenzhen markets was about RMB 2.08 trillion, up RMB 140 billion from the previous day. The daily average turnover in June was about RMB 3.11 trillion.

3) Macro / Industry News

The National Bureau of Statistics reported that from January to June this year, profits of designated large-scale industrial enterprises nationwide totaled RMB 3.95 trillion, up 18.7% year-on-year. In June alone, profits of large-scale industrial enterprises rose 15.1% year-on-year. (Financial Times)

4) Stock-Specific News

Lao Pu Gold (6181) expects adjusted net profit for the first half of 2026, measured under non-IFRS standards, to be approximately RMB 4.31–4.36 billion, representing a year-on-year increase of about 83% to 85%. (Financial Times)

CSPC Pharmaceutical (1093) issued a profit warning, expecting shareholder net profit for the six months ending June 30 to be approximately RMB 5.9–6.2 billion, up 1.32 to 1.43 times year-on-year. CSPC noted that the expected profit increase is mainly due to a significant rise in licensing income, with an upfront payment of USD 840 million expected to be recognized as licensing revenue in Q2 this year, contributing substantially to group revenue. (Financial Times)

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