Market Review: Hang Seng Index rebounds, northbound capital flows in nearly HKD 15 billion, New World Development rises over 7%

The Political Bureau of the Central Committee of the Communist Party of China indicated the continuation of a more proactive fiscal policy, moderately loose monetary policy, and sustained expansion of domestic demand, leading to a fluctuating upward trend in Hong Kong stocks today. The market digests corporate quarterly results and awaits U.S. economic data, with the Dow Jones Industrial Average slightly rising 0.03% the previous night, while the Nasdaq fell 1.2%. At the time of writing, the yield on U.S. 2-year bonds dropped to 3.422%, and the yield on U.S. 10-year bonds fell to 4.00%, with the U.S. dollar index declining to 97.69. Dow futures recently fell by 199 points or 0.4%, and Nasdaq futures recently dropped by 17 points or 0.07%. The Shanghai Composite Index rose 16 points or 0.4% to close at 4,162 points, while the Shenzhen Component Index fell 0.06%, and the ChiNext Index dropped 1%. The total trading volume in the Shanghai and Shenzhen markets was 2.49 trillion yuan.

The Hang Seng Index fell 1.4% yesterday, opened 66 points higher this morning, and expanded its gains, rising 320 points in the afternoon to reach a high of 26,701 points, closing up 249 points or 0.95% at 26,630 points. The Hang Seng China Enterprises Index rose 45 points or 0.5% to close at 8,859 points, and the Hang Seng Tech Index rose 28 points or 0.6% to 5,137 points. The changes in MSCI index constituents took effect after the market closed, with a total trading volume of 288.42 billion yuan for the day. The total trading volume of northbound funds was 93.486 billion yuan, while southbound funds had a net inflow of 14.997 billion yuan today (compared to a net outflow of 7.366 billion yuan on the previous trading day). The Tracker Fund of Hong Kong (02800.HK) rose 1.2% to close at 26.9 yuan, with a trading volume of 20.812 billion yuan, and the short-selling ratio for the day rose to 67.2% (compared to a 5-day average of 37.7%).

The Hang Seng Index rose a total of 217 points or 0.8% this week, while the Hang Seng China Enterprises Index fell a total of 100.07 points or 1.1%, and the Hang Seng Tech Index fell a total of 73 points or 1.4%. Southbound funds had a net outflow of 576 million yuan this week. The Hang Seng Index fell a total of 756 points or 2.8% in February, the Hang Seng China Enterprises Index fell a total of 457.6 points or 4.9%, and the Hang Seng Tech Index fell a total of 580 points or 10.1%. Southbound funds had a net inflow of 83.294 billion yuan in February (compared to a net inflow of 68.971 billion yuan in January).

【Northbound Funds Flow In, SenseTime and HESAI Surge】

The MSCI China Index changed its constituents after the market closed, with HESAI (02525.HK) and SenseTime (00020.HK) seeing their stock prices rise by 4.4% and 4.9% respectively, while Pony.ai (02026.HK) and Yangtze Optical Fibre and Cable (06869.HK) each rose over 10%. Fosun International (00656.HK), which was removed from the index, also rose by 7.5%, while Vanke (02202.HK) fell by 0.8%.

In the AI sector, Zhizhu (02513.HK) rose 3.3% for the day, while Haizhi Technology (02706.HK) and MiniMax (00100.HK) saw their stock prices drop by 12% and 3.2% respectively. Cloud service provider Kingsoft Cloud (03896.HK) rose 7.7%. Robotics stock Yujian (02432.HK) fell 3.1%. Delta Electronics (00179.HK) saw its stock price surge by 17.4% to close at 31.04 yuan, with a trading volume exceeding 1 billion yuan.

【One Thousand Stocks Rise, New World Performance Strong】

The Hong Kong stock market showed a positive trend, with the rise and fall ratio of main board stocks at 27 to 24 (compared to 17 to 34 the previous day), and 1,129 stocks rising (an increase of 2.8%). Today, 62 constituent stocks of the Hang Seng Index rose, while 24 fell, with a rise and fall ratio of 70 to 27 (compared to 1 to 81 the previous day) The market recorded short selling of HKD 59.194 billion today, accounting for 29.314% of the shortable stock turnover of HKD 201.93 billion (previous day's short selling rate was 20.036%).

After announcing its interim results, SHK PPT (00016.HK) saw its stock price rise, closing up 7.1% at HKD 146, with a turnover of HKD 2.296 billion. JP Morgan issued a report indicating that SHK's profit for the first half of the 2026 fiscal year grew by 17% year-on-year, far exceeding the bank's expected growth of 4%, mainly benefiting from the profits of properties developed in mainland China, which surpassed expectations. This is the first time in three years that SHK has increased its interim dividend, demonstrating management's confidence. The net debt ratio also improved further from 15.1% to 13.5%. As the profit margin for properties developed in Hong Kong is likely to rebound from 8% to mid-double digits, the bank expects SHK's average annual compound growth rate in profit over the next three years to reach 6%, with further upside risk to profits if sales momentum is stronger than expected.

JP Morgan believes that among many Hong Kong property developers, SHK offers the clearest profit growth outlook. This, along with its ample saleable resources, enables it to capture opportunities in the market recovery and continue to support its valuation premium due to its scarcity value. The bank believes that the Hong Kong residential market has transitioned from the "early stage of recovery" to the "expansion phase," expecting the discount to SHK's net asset value per share to gradually narrow from the current 34% to 22%. Morgan Stanley has given SHK a "Buy" rating, with a target price of HKD 162