Domestic and foreign capital are positioning in the same direction; the valuation depression in Hong Kong stocks may be approaching a mid-term inflection point.

After a long period of valuation suppression, the Hong Kong stock market has recently seen dual bullish signals from both domestic and foreign capital. The consensus that "Hong Kong stocks are a global valuation 洼地 (depression)" is continuously strengthening. Actions by long-position capital have materialized and are no longer just market opinions.

The effort by domestic capital to provide a floor is unprecedented. Two national-level state-owned capital operation platforms—China Chengtong and China Guoxin—have entered the market simultaneously, using tens of billions in funds to increase holdings in A-share central enterprises and hardcore technology targets. This is compounded by the continuous issuance of supporting special re-lending facilities, sending a clear top-down signal to stabilize long-term expectations for Chinese assets. The positive impact of policy funds is transmitted along the AH linkage mechanism, directly benefiting central enterprises, internet platforms, and Chinese concept semiconductor stocks listed synchronously in both markets. The most intuitive manifestation is the accelerating return of Southbound capital to the Hong Kong stock market, with a significant increase in domestic bottom-fishing intensity.

The attitude of overseas capital has also undergone a fundamental shift. Renowned investor and the prototype for "The Big Short," Michael Burry, publicly stated that now is the golden window for bottom-fishing Hong Kong stocks. His logic is clear and straightforward: Previously, global capital clustered around AI and overseas memory chips. Recently, overseas semiconductor targets such as SK Hynix and Micron have collectively corrected, with crowding in these tracks reaching its peak. A large amount of profit-taking capital has a need to flow out and reallocate. In contrast, many core assets in Hong Kong have had valuations at historically low levels for years, offering prominent cost-performance advantages. Not only is he verbally bullish, but he has also practically increased his position in JD.com's Hong Kong shares, using real holdings to validate his bullish judgment, bringing a strong demonstration effect to overseas institutional capital.

I. Deconstruction of Two Core Mainline Logics

AH Central Enterprises: The Core Beneficiary Direction of Policy Support

The core targets for this round of hundred-billion-level state-owned capital increases are concentrated in central enterprise assets, with a clear intent for policy stability.

1. Sufficient safety margin: Central enterprises generally have stable dividends and solid cash flows. The current valuation of Hong Kong-listed central enterprises is at a ten-year low, with limited downside space;
2. Continuous implementation of policy dividends: State-owned capital investment platforms continue to increase stakes, supported by special credit facilities, which can continuously raise the market's risk appetite for central enterprise assets;
3. Smooth linkage transmission: The strength of A-share central enterprises will directly drive the valuation repair of the same targets in Hong Kong. Southbound capital prefers high-dividend, low-volatility central enterprise targets, making mid-to-long-term allocation capital more sustainable.

Hong Kong Internet and Semiconductors: Absorbing Outflowing Overseas Capital

1. Sufficient room for valuation repair: Hong Kong internet platforms and Chinese concept semiconductors experienced a long period of correction previously, with deep valuation discounts. Compared to US tech stocks, they possess extremely strong comparative price advantages;
2. The logic of capital migration holds: The crowded trading in overseas AI and memory chip tracks is cooling down, creating a demand for capital to cash out and flee. Hong Kong technology has become the core destination for capital diversion;
3. Marginal improvement in fundamentals: Internet platforms' profitability continues to optimize, and the logic of semiconductor domestic substitution remains unchanged in the long term. Valuation + fundamentals provide dual drivers for repair.

II. Two Scenario Deductions: Distinguishing Pulse Rebounds from Mid-Term Reversals

1: Short-Term Pulse Market

If there is only short-term capital inflow without sustained fundamental improvement support, this rise is merely a 阶段性 (phased) pulse market.
Limited Drivers: State-owned capital support and big shots' bullishness only bring emotional catalysts. Without sustained recovery in corporate earnings and macroeconomic consumption data, capital inflows lack sustainability.
Trend Forecast: After the rebound, capital will cash out and leave. The Hong Kong stock market will return to range-bound oscillation. The sustainability of the trend is weak, suitable for short-term quick entry and exit, not for long-term holding.

2: Mid-Term Reversal Market

Resonance of three logics: policy, capital, and valuation, officially establishing the turning point.
Supporting Drivers: Continuous state-owned capital support for the floor, long-term return of Southbound capital, continuous configuration of Hong Kong technology by overseas capital, alongside marginal recovery in domestic economic data and repair of Chinese corporate earnings.
Trend Forecast: The Hong Kong stock market breaks out of the bottom oscillation range. Central enterprises, internet, and semiconductors will see sustained repair trends, giving the market mid-term layout value.

III. Layout Ideas and Allocation Trade-offs

1. Conservative investors prioritize Hong Kong central enterprise sectors
   Advantages: Policy backing, high dividends, lower volatility, strong anti-drawdown capability. Suitable for mid-to-long-term base position allocation, avoiding frequent monitoring for short-term fluctuations.
2. Aggressive investors layout Hong Kong internet and semiconductors
   Advantages: Greater valuation elasticity, able to fully absorb diverted overseas capital, higher upside potential for the trend. However, volatility is larger, requiring position control and proper stop-profit/stop-loss measures.
3. General Operational Principles
   Do not go all-in at once; adopt a batch-by-batch accumulation strategy. Distinguish between short-term speculation and mid-to-long-term holding. If the market only sees an emotional rebound, take profits promptly. If fundamentals continue to be verified, retain base positions to capture mid-term trends.

Risks include domestic macroeconomic recovery pace missing expectations, Federal Reserve monetary policy disturbing global foreign capital flows, overseas tech track capital flowing back, and geopolitical sentiment impacting risk appetite for Chinese assets.

IV. Conclusion

On one side, there is hundred-billion-level state-owned capital support domestically and continuous Southbound capital return; on the other, top-tier overseas capital is publicly bullish and adding positions with real money. Domestic and foreign capital form a rare resonance for going long. The window for repairing Hong Kong stocks' long-term undervaluation has opened. Whether this round of market movement is a short-term emotional pulse or a true bottom reversal depends primarily on whether corporate earnings can sustainably recover and the sustainability of capital entry. On the operational level, steady capital should anchor Hong Kong central enterprises, while those seeking elasticity can focus on internet and semiconductor tracks, waiting quietly for the market to give a clear trend answer.$Hang Seng Index(00HSI.HK)