Xinhua News Agency, Shanghai, January 21st (Shanghai Securities News reporter Fei Tianyuan) On Wednesday, southbound funds continued to show a unilateral inflow, with a net purchase of 20.289 billion Hong Kong dollars throughout the day. So far this year, southbound funds have accumulated a total of 205.582 billion Hong Kong dollars in net purchases, equivalent to about 172 billion yuan, which is four times the net purchase scale of northbound funds during the same period. With the help of mainland funds, the Hong Kong stock market has continued to heat up recently. Hong Kong’s Hang Seng Index continued to rise yesterday, with an increase of 1.08%. Since the new year, the cumulative increase has reached 10.03%, leading the world’s major market indexes. Tencent Holdings, Meituan and other popular companies continue to hit new highs. For investors who are not familiar with the Hong Kong stock market, how can they participate in this Hong Kong stock feast? Experts believe that on the one hand, buying Hong Kong stock funds is a good choice; on the other hand, referring to the latest flow of Southbound Stock Connect can provide a reference for specific stock selection. In addition, we also need to pay attention to and prevent risks. (Subheading) New-economy companies are still the strongest hot spots. Similar to the style of Northbound funds keen on core assets, Southbound funds transactions are also concentrated in a few leading companies. According to data released by the Hong Kong Stock Exchange, as of January 19, the latest stock market value of the top 20 largest stocks of Southbound Funds totaled HK$1.43 trillion, accounting for 57%of the total market value of Southbound Funds holdings. The heading trend is obvious. . Specifically, as of January 19, among the top 20 largest stocks of Southbound funds, 14 stocks have been increased by mainland funds this year. Multiplying the change in shareholding in the interval by the average transaction price in the interval, the net purchase amount within the interval can be roughly calculated. Tencent Holdings, the largest holding company in Southbound funds, has continued to gain rapid gains in mainland funds this year. As of January 19, Southbound Capital has increased its positions in Tencent Holdings in a total of 80.13 million shares this year, representing an increase of 18.81%. Based on the average transaction price, the southbound funds have accumulated a net purchase of Tencent Holdings of 48.656 billion Hong Kong dollars this year, ranking first among all Southbound Stock Connect targets. Many brokers recently released research reports, focusing on the investment value of Tencent Holdings. CITIC Securities believes that Tencent’s game, advertising and payment businesses still have a lot of room for improvement, and continue to be optimistic about Tencent’s growth and profitability as a domestic Internet giant. In the context of the video account upgrade, Tencent’s content ecological barriers are expected to be further strengthened, and the commercialization space is expected to be further opened. Essence Securities stated that Tencent’s core game business is robust, social advertising contains monetization potential, and To B business is expected to bring considerable revenue and profit margins. In addition to Tencent Holdings, the chip leader SMIC’s H-shares have received a net purchase of HK$12.703 billion in Southbound funds this year, and Meituan has obtained a net purchase of HK$7.439 billion in Southbound funds. New economy companies such as Cinda Biotech and Xiaomi Group have received significant increase in southbound funds. (Subheading) Some characteristic companies have received capital attention and the logic of the Northbound Fund’s enthusiasm for A shares liquor sector is similar. Featured companies have also maintained a high degree of attention. The stocks of the Hong Kong Stock Exchange have risen 19.29%this year. Among them, the number of shares held by Southbound funds increased from 75,355,700 at the end of last year to 78,461,100 shares on January 19, with an increase of 3.105 million shares. Calculated based on the average transaction price in the range, the Hong Kong Stock Exchange has obtained a net purchase of HK$1.450 billion from southbound funds this year. As the Hong Kong stock market is booming, recent research reports from brokerage firms on the Hong Kong Stock Exchange continue to emerge. Zhongtai Securities The non-bank team believes that the Hong Kong Stock Exchange has been actively trading since the beginning of 2021, and it is expected that the net profit growth rate in the first quarter of this year will be sufficient. Up to 60%or more. In the past five years, under reform measures such as interconnection, the company’s profitability and stability have increased significantly. Based on the stability of earnings, the strengthening of growth, and the improvement of the status of the exchange, the team believes that the long-term valuation center of the Hong Kong Stock Exchange has room for improvement. The share price of e-cigarette leader Smol International has risen by more than 25%this year, and continues to set new historical highs. Data show that as of January 19, Southbound funds have accumulatively added 86.29 million shares of Simer International this year, with a margin of 24.31%and a net purchase of approximately HK$5.744 billion. Everbright Securities The light industry team stated that the current e-cigarette industry is in the early stages of development, with low penetration and large market dividends. In the e-cigarette industry chain, Smol International owns the core FEELM ceramic core technology, which has a higher bargaining power in the industry chain and is expected to benefit first in this round of industry development. (Subheading) Four potential risks are worthy of vigilance. Although the Hong Kong stock market has continued to be hot recently, some leading companies have obvious profit-making effects. However, due to the obvious differences between Hong Kong stocks and A-shares in terms of investor structure, liquidity, and market systems, ordinary investors also need to pay attention to and prevent risks when investing in the south. Wang Hanfeng, chief strategist at CICC, said that there are four potential risks in the Hong Kong stock market that are worthy of vigilance:The first is to avoid small companies with inactive transactions to prevent liquidity shocks. The trading activity of the Hong Kong stock market is much lower than that of A shares, with an average daily turnover of around HK$100 billion to HK$300 billion. Therefore, individual stocks with too small market capitalization and poor liquidity may have liquidity discounts or even suffer liquidity shocks. . Second, the flexible margin trading system and short-selling mechanism have brought stock price fluctuations. Short selling is a common behavior and trading strategy in the Hong Kong stock market, especially for stocks with higher valuations. Generally speaking, a low percentage of short-selling transactions often indicates that market sentiment is relatively euphoric, and vice versa. The third is the potential supply pressure brought about by the flexible refinancing system. Compared with the A-share market, the refinancing system of Hong Kong stocks is also more flexible. A certain percentage of new share placements and rights issues do not require the authorization of the general meeting of shareholders, and the placement of old shares has no obvious constraints on general shareholders. Fourth, it is more sensitive to the overseas environment. The investor structure of Hong Kong stocks is still dominated by foreign capital. Therefore, the flow of overseas funds, external uncertainty, and the trend of U.S. bond interest rates have a greater impact on Hong Kong stocks. (End)