China Southern Hang Seng ETF

HSI index seems to be in the bottoming out process from the hard selling this round caused by the recent events of mainland gov crackdown on fund outflows US gov blacklistings of some index stocks etc...TGIF if the opportunity arise will try some VKLW next week. Cheers

$Hang Seng Index(00HSI.HK) The Hang Seng Index has been fluctuating within a 20-year range. Can you believe it? It's really no different from A-shares; from this perspective

$Hang Seng Index(00HSI.HK)has evolved into a hybrid market that reflects China’s economic cycle more than Hong Kong’s domestic fundamentals. Its performance is increasingly driven by mainland policy follow-through, earnings durability in platform and financial stocks, and cross-border capital flows via Stock Connect. Valuation alone is no longer a catalyst; sustained upside depends on whether policy support translates into real profit recovery and renewed confidence from long-term global investors.

$XTALPI(02228.HK) The first to rise in the Hong Kong stock watch list! Push it up!

The exchange rate of HKD against USD is rising rapidly. Will there still be big opportunities in Hong Kong stocks? $Hang Seng Index(00HSI.HK) $Hang Seng TECH Index(STECH.HK)

While the US stock market hovers under the shadow of tariffs, the Hong Kong stock market is experiencing a liquidity-driven structural frenzy. But is this 'Hong Kong stocks feast' the beginning of a trend revaluation, or a short-lived bubble induced by capital?

From a macro perspective, the weak dollar cycle and the abundance of Hong Kong dollar liquidity are the core drivers of the Hong Kong stock market. In May, US tariff revenue surged to a peak of $22 billion, yet the CPI remained stable, coupled with the potential impact of immigration policies on the job market, the probability of a Fed rate cut in June-July is extremely low. The US stock market remains in a tug-of-war between 'chicken ribs market and downside risk.' In contrast, the Hong Kong dollar exchange rate has quickly slid from the strong-side guarantee to the weak-side edge, HIBOR rates are nearly zero, and the abundant liquidity is flooding into new consumption, innovative drugs, and A/H premium targets, driving both blue-chip dividend stocks and growth assets higher.

However, the sustainability of the structural revaluation of Hong Kong stocks is highly dependent on the liquidity environment. The current extremely low level of HIBOR has deviated from the US benchmark interest rate. If the Fed's policy shifts or there are changes in the supply and demand of funds, a liquidity retreat could trigger a valuation correction. More critically, the structural premium of the same asset in Hong Kong stocks compared to A-shares lacks fundamental support. In a market dominated by southbound funds, caution is needed against the risk of valuation overshoot under 'capital frenzy.'

In the short term, as long as the cost of borrowing in Hong Kong dollars remains low, there is still room for liquidity-driven revaluation to continue. However, in the long term, whether Hong Kong stocks can escape the 'capital market' dilemma depends on whether corporate earnings can take over liquidity as the anchor of valuation. Investors need to closely monitor changes in HIBOR rates and maintain sensitivity to risks amid the liquidity feast. $Hang Seng Index(00HSI.HK)

$Hang Seng Index(00HSI.HK)

When the Hong Kong dollar triggers the strong-side convertibility undertaking, the Hong Kong government will be forced to issue Hong Kong dollars to buy US dollars (unless Hong Kong abandons the linked exchange rate system due to another crisis caused by excessive base money).

Short-term may benefit the Hong Kong stock market.

On a weekly basis, the southbound capital flow in Hong Kong stocks was a net outflow in the past week. This is unusual, as it's the first time this has happened in at least over a year. $HSTECH ETF(03032.HK) $Hang Seng Index(00HSI.HK) $XIAOMI-W(01810.HK)

$XTALPI(02228.HK)$Hang Seng Index(00HSI.HK)This is a key macro indicator for Hong Kong stocks.

$Hang Seng Index(00HSI.HK) $XTALPI(02228.HK) Who should be blamed for these poor souls in Hong Kong stocks today? Sigh... damn it

During the 2018 trade war, Gao Shanwen gave a relatively well-known internal speech:

Our generation has already made enough money, so young people should just wash up and go to sleep.

As for the 2025 tariff war, what I want to say is: young people might not be able to sleep.

$Hang Seng Index(00HSI.HK)$Hang Seng TECH Index(STECH.HK)$Invesco QQQ Trust(QQQ.US)$SPDR S&P 500(SPY.US)

Another day protected by southbound capital! At 13:30 in the afternoon, the southbound capital suddenly surged, and the intraday chart skyrocketed after a 10-minute delay (did you day trade during these 10 minutes? 😂).

Unlike yesterday, the southbound capital first rose and then fell in the morning, showing overall weakness. By 13:30, the net purchase was only 1.5 billion. After the surge, the cumulative net purchase for the day reached 5.15 billion. Compared with yesterday, I'm more convinced that there is a will behind the southbound capital.

$Hang Seng Index(00HSI.HK) $BABA-W(09988.HK) $TENCENT(00700.HK)

$Hang Seng Index(00HSI.HK) Hold on! Key resistance level! Key support!

As Alibaba & Hang Seng Technology broke previous highs, here are some insights from Dolphin Research.

During the Spring Festival of the Year of the Snake, while everyone is celebrating the New Year, the Chinese stock market, especially the Hong Kong stock market, and overseas markets, is quite vibrant. Taking the Hang Seng Technology Index as an example, from the low point on January 13 to today, it has accumulated a rise of over 25% in just one month, outperforming global capital markets and far better than the generally fluctuating U.S. stock indices during the same period, reminiscent of the significant surge around October last year.

In this wave of surge, Alibaba is undoubtedly one of the leading stocks. From January 13 to today, it has accumulated a rise of about 50%. As a trillion-dollar giant, a half-fold increase in just one month is astonishing and has brought substantial returns to investors.

Today, both Alibaba and the Hang Seng Technology Index briefly broke through last October's highs (though they have retreated somewhat since), and Dolphin Research would like to share some of our insights:

1) Firstly, the catalyst and main theme of this round of increase are different from last October. The previous surge was due to a policy shift leading to a comprehensive reassessment of Chinese assets. This time can be summarized as follows: DeepSeek has replicated the "singularity moment" of ChatGPT in the U.S. stock market, which has initiated a continuous AI wave. Therefore, the leading stocks in this round are mainly related to AI, including upstream semiconductor chips, cloud computing power providers, and software or hardware applicable to AI (such as smartphones, AR glasses, autonomous driving, etc.).

2) Since the main theme is closely related to AI, borrowing from the experience of the U.S. stock market, the earliest and most benefited from AI investments are the upstream chip hardware (NVIDIA corresponds to China's SMIC). Following closely are cloud computing providers represented by Microsoft (from the low point at the end of 2022 to the mid-2024 high point, trillion-dollar supergiants have seen their stock prices double). With the "replay" of the AI investment theme in China, the demand for cloud computing services from upstream is relatively certain, benefiting from the substantial usage requirements brought by downstream enterprises for both training and inference. Especially after DeepSeek has demonstrated the possibility of low-cost & high-performance AI large models, it suggests that the costs for cloud providers to offer AI services may be lower than previously expected, and downstream demand may be higher than anticipated. This means higher profits + higher revenue potential, which can be said to enhance the market's long-term outlook for cloud providers in the AI era.

Under this logic, domestic cloud computing or AI model providers like Alibaba and Baidu are the most direct beneficiaries. The news that Apple will collaborate with Alibaba to provide AI services for domestic iPhone users (which has been confirmed by Joseph Tsai today) has further highlighted Alibaba. Although the details of the collaboration are currently unknown and it is difficult to quantify the benefits, emotionally, the previously somewhat obscure Alibaba large model has been brought to the center of market attention under Apple's endorsement, amidst "has-been internet celebrities" like Wenxin Yiyan, Kimi, and Doubao. In short, the market's reassessment of Alibaba Cloud should be the main contributor to Alibaba's significant surge this time.

3) Additionally, Alibaba's valuation is still largely dependent on its Taobao and Tmall businesses, and the core e-commerce business must not become a drag on valuation. According to the company's guidance for 3QF25, the Taobao and Tmall Group expects CMR to grow by 5% year-on-year, while adjusted EBITA is expected to decline by about 3% year-on-year. Compared to the less than 3% year-on-year growth in CMR and over 5% year-on-year decline in profits in 2QF25, there has been a quarter-on-quarter improvement. Measures like full-site push seem to be starting to show effects in enhancing Taobao and Tmall's TR. Although we currently maintain a cautious outlook on the mid-term trends of domestic e-commerce, the improving state of the core e-commerce business at least won't worry investors about being undermined by a weak-performing e-commerce business while betting on AI and Alibaba Cloud, which is also the foundation for Alibaba's noticeable rise this time.

4) After a rise of about 50%, how do we view Alibaba's current price? Firstly, we want to point out that the aforementioned visions around AI and the reassessment of Alibaba Cloud's performance & valuation are still in the logical and emotional phase, and the actual impact on performance will take time to materialize. In other words, the recent surge is partly driven by valuation expansion, especially the valuation of Alibaba Cloud.

We consider two scenarios. Firstly, in a neutral optimistic scenario, we generally keep the valuation of the core Taobao and Tmall business unchanged (corresponding to the unclear prospects of domestic e-commerce), still applying a 10x PE to the adjusted earnings for 2025, corresponding to a valuation of about 1.5+ trillion. For Alibaba Cloud's valuation, we refer to the current implied expectations, applying a 5x P/S for 2025 revenue (slightly lower than the average of about 7x P/S for U.S. SaaS), corresponding to about 570 billion. The total valuation is about 2.1 trillion, roughly corresponding to the current market value.

In an extremely optimistic scenario, if we restore the valuation of the core Taobao and Tmall business to 12x PE, Alibaba Cloud's valuation would be raised to above the average of U.S. SaaS at 10x P/S. Then, just the Alibaba Cloud business would correspond to about 1.15 trillion in market value, with the group totaling nearly 3 trillion in market value. It should be noted that this is a simple extrapolation of the valuation range under pure valuation expansion. As seen in the U.S. stock market, after the first wave of emotional surges, it is still necessary to observe the actual performance delivery of each quarter. If the narrative can be transformed into tangible incremental performance, then after raising performance expectations, the final valuation may exceed our above optimistic estimates. If it is just storytelling without performance delivery, then naturally it will "come from nowhere, go back to nowhere."

Of course, Dolphin Research holds an optimistic view on the overall prospects of AI.

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Risk Disclosure and statement of this article: Dolphin Research Disclaimer and General Disclosure