Overnight, Chinese assets surged across the board, with the Nasdaq Golden Dragon China Index rising nearly 3%, and popular U.S.-listed Chinese stocks collectively posting significant gains. On the news front, data released by the U.S. Bureau of Labor Statistics showed that the U.S. August CPI increased by 2.9% year-on-year, while core CPI rose by 3.1% year-on-year, both meeting expectations. The CME FedWatch Tool indicated that traders widely expect the Federal Reserve to cut interest rates by 25 basis points in September, with the probability of a 50-basis-point cut also increasing.

On September 12, Hong Kong stocks continued to rise, with the Hang Seng Index gaping up 1.74% at the open, and the Hang Seng Tech Index rising 1.97%. Alibaba led the gains, surging 6% to hit a new nearly four-year high, while Baidu Group followed with a nearly 6% increase. Tencent Holdings and JD.com also strengthened. Among related ETFs, the Hang Seng ETF (159920) and the Hang Seng China Enterprises ETF (159850) both rose nearly 1%, while the Hong Kong Consumption ETF (513230) gained nearly 1.5%. Market trading was active, attracting significant capital attention.

Notably, foreign capital is increasing its allocation to Chinese assets. The latest report from the Institute of International Finance (IIF) showed that foreign investors net purchased a total of $39 billion in Chinese bonds and stocks in August. Additionally, data from Goldman Sachs Prime Services indicated that global hedge funds’ net buying of Chinese stocks (including A-shares and Hong Kong stocks) in August reached the highest level since September 2024.

CICC pointed out that a notable feature of the Hong Kong stock market this year is that structure outweighs the index, with main themes continuously rotating. Given the lack of strong upward momentum in fundamentals and the index, investors should capitalize on the structural advantages of Hong Kong stocks, focusing on profit trend-driven sectors while supplementing with certain China-U.S. mapping themes. Citigroup stated that it has raised its year-end target for the Hang Seng Index by 7% to 26,800 points, with further expectations of it rising to 27,500 points and 28,800 points in the first half and end of next year, respectively. Kaiyuan Securities suggested that the opportunity for Hong Kong stocks to catch up relative to A-shares may have arrived, as A-shares are gradually entering a phase of valuation digestion after gains, while the relative advantages of Hong Kong stocks are beginning to become more prominent.

Notable targets:

Core broad-based Hong Kong stocks: Hang Seng ETF (159920)

Focusing on the development of Chinese enterprises in Hong Kong: Hang Seng China Enterprises ETF (159850)

Covering core consumer assets in Hong Kong stocks: Hong Kong Consumption ETF (513230)