Hong Kong stocks experienced a significant pullback on Monday, with the Hang Seng Index falling by 1.85% and the Hang Seng Tech Index sliding by 2.52%.
Despite the market volatility, mainland Chinese investors continued their aggressive buying, with southbound capital recording a net purchase of HK$29.6 billion for the day, marking the highest since the launch of the Shanghai-Hong Kong and Shenzhen-Hong Kong Stock Connect programs.
AI Optimism Drives Revaluation, But Short-Term Risks Exist
CICC said in a research report that the current rebound is driven by optimism around technological trends, and the extent to which this optimism is priced in and the remaining imagination space will be key to determining the market’s future potential.
The bank noted that investors should manage their positions and costs with caution in the short term, and given limited short-term catalysts and potential risks such as policy disappointments and external disruptions, a wait-and-see approach may be warranted.
CICC maintained its recent projection of the Hang Seng Index reaching 23,000–24,000 points in the short term, with an optimistic scenario reaching 25,000 points.
However, it emphasized that these static projections do not imply an imminent decline once those levels are reached, nor do they rule out a short-term surge driven by capital and sentiment. Instead, they indicate that unless long-term expectations materialize, continuously exhausting market optimism could lead to increased divergence in investor views.
Southbound Capital Surpasses HK$340 Billion in 2025
According to data compiled by Wind Information, as of March 10, Southbound net inflows into Hong Kong stocks have exceeded HK$340 billion in 2025, and over the past month alone, more than ten trading days recorded net inflows exceeding HK$10 billion.
There have been eight days since the launch of the Stock Connect programs when net daily inflows exceeded HK$20 billion, with four occurring in January 2021. On March 10, the net inflow of HK$29.6 billion set a new daily record, and marking the third day in the past month when inflows exceeded this threshold.
Major Investment Banks Raise Target Prices for Chinese Assets
Recently, major financial institutions have been actively revising their target prices for Chinese assets.
- Daiwa Securities raised Alibaba’s Hong Kong-listed stock target price from HK$165 to HK$175 per share.
- CLSA raised JD Health’s target price from HK$40 to HK$45 per share.
- HSBC raised Xiaomi’s target price from HK$49.90 to HK$65.60 per share.
- Additionally, Citi raised target prices for AAC Technologies and Sunny Optical, while Goldman Sachs increased target prices for China International Capital Corporation (CICC), CITIC Securities, and GF Securities.
Since the start of 2025, several Hong Kong-listed stocks have seen substantial Southbound inflows. Among the top ten net inflow stocks, seven companies—Alibaba, Tencent, SMIC, China Mobile, ICBC, Bank of China, and China Merchants Bank—have received over HK$10 billion each in net purchases.
Alibaba recorded net purchases of 48.28 million shares, with a total inflow exceeding HK$60 billion. Tencent saw net purchases of 9.85 million shares, also exceeding HK$60 billion in net inflows.