HK Stock Connect Weekly Report: Earnings catalysts resonate with policy dividends, "innovative drugs + large models" dual mainlines unfold in HK Stock Connect - 20260807

I. Market Overview for the Week

During this week (3-7 August), the three major Hong Kong indices moved in a range-bound pattern: buoyed by the signal of Stock Connect expansion at the start of the week, they posted a strong August opening, then experienced adjustments mid-week before collectively closing higher on Friday after opening lower. The Hang Seng Index fell 0.84% cumulatively for the week, the Hang Seng TECH Index rose 0.6% cumulatively, and the Hang Seng China Enterprises Index fell 0.94% cumulatively. Average daily turnover for the week was approximately HKD 261.2 billion, with active market trading.

In terms of southbound capital, the week showed a pattern of "inflow first, then outflow": net inflow of HKD 11 billion on Monday, net inflow of HKD 2.57 billion on Tuesday, net outflow of HKD 1.398 billion on Wednesday, net outflow of HKD 1.461 billion on Thursday and net sell of HKD 778 million on Friday. In aggregate, southbound capital recorded a modest net inflow of approximately HKD 9.9 billion for the full week.

II. Review of Hot Sectors This Week

1. Innovative drugs/CRO sector - Dense earnings catalysts, leading the week

This week, the innovative drug sector became the strongest mainline driven by dense earnings catalysts. On Monday, WUXI APPTEC's better-than-expected interim results ignited the CRO sector, with WUXI APPTEC (02359) up 11.17% and GENSCRIPT BIO (01548) up 11.47%. On Wednesday, HAIZHI TECH GP surged 42.9% to lead the whole market. On Thursday, MINIMAX jumped 17.1% on its first day of formal admission to the Connect, with Z.AI up 4.42%. On Friday, pharmaceutical stocks broke out across the board, with ZAI LAB (09688) up 18.38%, WUXI BIO (02269) up 10.83% and WUXI APPTEC up 7.01%.

Key catalysts: BEONE MEDICINES (06160.HK) announced net profit of RMB 3.271 billion for the first half of the year, surging 627% year-on-year, sharply raising its full-year revenue guidance to RMB 44.9-46.2 billion; REMEGEN (09995.HK) issued a profit alert, expecting first-half net profit attributable to owners of the parent of RMB 4.7 billion, marking its first large-scale interim profitability.

Related ETF performance: Wanjia CSI HK Equities Innovative Drugs ETF (520700) rose 6.58% on Friday, and Invesco Great Wall CSI HK Equities Innovative Drugs ETF (513780) rose 6.41%, with multiple innovative drug ETFs sweeping the top five of the gainers board.

2. CPO/PCB/optical communication concepts - High-level consolidation after a strong breakout

On Monday, the optical communication concept returned strongly, with CIG (06166) up 19.81%, ZJ INNOLIGHT (03308) up 17% and YOFC (06869) up 10.34%; most PCB concepts strengthened, with CFMEE (09630) up 22.14% and DELTON (01989) up 12.22%. On Wednesday, the CPO concept continued its strong breakout, with VGT (02476) up 16.18% and KB LAMINATES (01888) up 10.28%. On Friday, PCB concepts rose across the board, with DELTON (01989) up 10.93% and VGT (02476) up 10.91%, as Goldman Sachs sharply raised its market forecasts for AI server PCBs and CCL.

Active targets: KB LAMINATES (01888) topped the southbound turnover ranking for multiple consecutive days, with southbound turnover of HKD 7.076 billion on Wednesday; YOFC (06869) rose 14.58% on Wednesday.

3. Large models/AI applications - MINIMAX leads on its first day of admission, the "twin titans" advance together

The large model sector remained active throughout the week. On Monday, the AI applications direction continued to advance, with MININGLAMP-W (02718) up 15.62%. On Wednesday, Goldman Sachs sharply raised its 2026 ARR expectations for China's AI large models to USD 13 billion, with Z.AI's revenue expectations for this year raised by 35% and MiniMax's 2026-2028 revenue expectations raised by 22%-64%. On Thursday, MINIMAX-W (00100) surged 17.1% against the trend on its first day of formal admission to the Connect, with Z.AI (02513) up 4.42%. On Friday, the twin large-model titans climbed again, with Z.AI up 14.63% and MINIMAX-W up 9.83%. Since MINIMAX's admission to the Connect on Thursday, its cumulative gain over two trading days reached approximately 28.6% (on a compounded basis), with unabated market enthusiasm.

Z.AI (02513.HK) ranked among the top in southbound turnover for multiple consecutive days, with southbound turnover of HKD 9.652 billion on Friday; MINIMAX-W recorded southbound turnover of HKD 7.543 billion on Friday, with southbound net buying of HKD 2.226 billion.

4. Solar sector - Driven by both policy and futures, a strong rebound

On Monday, solar stocks were strong throughout the day, with XINYI SOLAR (00968) up 13.41% and GCL TECH (03800) up 11.48%, as the main polysilicon futures contract hit the daily limit in the afternoon session and the State Administration for Market Regulation carried out price compliance guidance for the solar industry. On Friday, solar stocks rebounded broadly, with XINTE ENERGY (01799) up 13.53%, as eight major polysilicon producers signed an anti-involution initiative.

5. Other sector highlights

Nuclear power concept: strong on Monday, with the State Council approving eight nuclear power units and DONGFANG ELEC (01072) up 9.29%.

UHV concept: strengthened on Wednesday, with HARBIN ELECTRIC (01133) up 7.55%, as the scale of UHV projects under construction during the 15th Five-Year Plan period is expected to reach twice that of the 14th Five-Year Plan period.

Gold stocks: broadly higher on Wednesday, with CHINAGOLDINTL (02099) up 13.11% as international gold prices returned above USD 4,100; gains widened on Friday, with ZIJIN MINING (02899) up 3.12%.

Coal stocks: led the gains on Thursday, with YANKUANG ENERGY (01171) up 6.12% as thermal coal prices were raised across the board.

Hong Kong insurance stocks: weak throughout the day on Thursday, with AIA (01299) down 5.92%, dragged by rumors of taxation on gains from offshore policies.

Airline stocks: under pressure on Friday, with MGM CHINA (02282) down 7.76%.

III. Key Events for HK Stock Connect

1. Eligible securities list adjustment - MINIMAX, NEXCHIP and others formally admitted

On 6 August, the Shenzhen Stock Exchange announced adjustments to the HK Stock Connect eligible securities list, admitting MINIMAX-W (00100.HK), LUXSHARE ICT (02475.HK) and CCTC (06951.HK), effective from that day. MINIMAX became the second domestic large-model stock to enter HK Stock Connect after Z.AI.

On 7 August, the Shenzhen Stock Exchange announced the admission of NEXCHIP (02249.HK), and the Shanghai Stock Exchange had also added NEXCHIP to the southbound list under Shanghai-Hong Kong Stock Connect on 6 August. NEXCHIP is principally engaged in semiconductor wafer foundry and is an A-share STAR Market listed company.

2. Signal of Stock Connect expansion released

On 3 August, at the listing ceremony of the five-year RMB government bond futures on HKEX, the regulators stated that they are, together with the Hong Kong side, pressing ahead with preparations for including RMB stock trading counters and REITs in the Shanghai-Shenzhen-Hong Kong Stock Connect. The Connect has operated smoothly for more than 10 years, with market capitalisation coverage of eligible stock targets exceeding 90% in both directions.

3. Second phase of HKEX's minimum spread reduction formally implemented

On 3 August, HKEX formally launched the second phase of its minimum spread reduction for Hong Kong stocks. For securities priced between HKD 0.5 and HKD 10, the minimum tick size was reduced from HKD 0.01 to HKD 0.005, a reduction of 50%. The measure applies to HK Stock Connect eligible stocks from 5 August, helping to improve trading efficiency and price discovery.

4. Quarterly adjustment of the AH Share Smart Index

On 3 August, constituent adjustments were made to the CSI Hang Seng Shanghai-Hong Kong Stock Connect AH Share Smart Index, admitting GIGADEVICE (03986.HK) and MONTAGE TECH (06809.HK) and removing China Southern Airlines Co., Ltd. and China Railway Construction Corporation Limited.

IV. HK Stock Connect-related A-share ETF Rankings (Focus of the Week)

The trading mainline of HK Stock Connect-related A-share ETFs was extremely clear this week - innovative drug ETFs almost monopolised the top of both the gainers board and the active board, becoming the core allocation direction throughout the week. The direct catalyst for this came from the fundamentals: BEONE MEDICINES' first-half net profit surged 627% with a sharp upward revision of its full-year revenue guidance, and REMEGEN achieved large-scale interim profitability for the first time; the earnings breakout of the two benchmark innovative drug stocks in HK Stock Connect quickly transmitted to the NAV and turnover of related ETF products.

On Friday (7 August), Wanjia CSI HK Equities Innovative Drugs ETF led the entire market with a 6.58% gain, followed by Invesco Great Wall CSI HK Equities Innovative Drugs ETF with a 6.41% gain that day; their turnover reached RMB 949 million and RMB 953 million respectively, with turnover rates as high as 131.15% and 32.98%, reflecting extremely high short-term capital participation in the innovative drug track. Harvest CSI HK Equities Innovative Drugs ETF, Maxwealth CSI HK Equities Health Care Theme ETF and ChinaAMC CSI HK Equities Health Care Theme ETF also rose between 5.8% and 6.3% that day, with multiple products jointly dominating the top five of the gainers board in a broad rally. From a full-week perspective, China Universal CNI HK Equities Innovative Drugs ETF continued to lead in turnover, with single-day turnover of HKD 2.787 billion on Friday, far exceeding similar products; Yinhua CNI HK Equities Innovative Drugs ETF recorded turnover of RMB 1.72 billion that day and E Fund Hang Seng HK Innovative Drugs ETF RMB 1.347 billion, with turnover rates of 22.85% and 20.62% respectively, maintaining a high level of trading activity. 

Information technology ETFs also performed well this week, driven by the rotating strength of the semiconductor industry chain, AI large models and CPO concepts, with related products repeatedly occupying the top of the active board mid-week. Hwabao CSI HK Equities Information Technology Integration ETF recorded turnover of RMB 2.187 billion on Friday with a turnover rate as high as 89.50% and a gain of approximately 2.95% that day; its high-turnover feature reflects the high-frequency trading tendency of short-term capital in the technology sector. Penghua CSI HK Equities Information Technology Integration ETF, E Fund CSI HK Equities Information Technology Integration ETF, GF CSI HK Equities Information Technology Integration ETF and other products generally rose between 2.7% and 2.9% on Friday, presenting a broad rally. On Tuesday, ChinaAMC CSI HK Equities Information Technology Integration ETF jumped 4.09% in a single day with turnover of nearly RMB 700 million, becoming the highlight among technology ETFs that day.

By comparison, HK Stock Connect internet ETFs performed steadily overall this week, with fluctuation ranges clearly smaller than those of the innovative drug and information technology sectors. Fullgoal CSI HK Equities Internet ETF recorded turnover of RMB 1.714 billion on Friday, up slightly 0.16%; E Fund CSI HK Equities Internet ETF recorded turnover of RMB 719 million, down slightly 0.10%, showing an overall range-bound pattern. The internet sector lacked major event catalysts this week, with relatively dispersed capital attention and a more passive role of tracking index fluctuations.

Overall, the capital flow logic in the ETF market this week was clear - a three-tier heat structure of innovative drugs > information technology > internet ran through the entire period. The innovative drug sector, driven by sustained catalysts of better-than-expected earnings, became the direction with the most concentrated capital; the information technology sector remained active on local hotspots in the AI industry chain; and the internet sector was relatively flat. This structural feature is broadly consistent with the three-track parallel situation of innovative drugs, CPO and large models at the individual stock level of HK Stock Connect, and also reflects that the current market tends to favour structural allocation around earnings certainty and industry trends.

V. Market Notes

Eligible securities list adjustment: A total of four targets were admitted this week - MINIMAX-W (00100.HK), LUXSHARE ICT (02475.HK) and CCTC (06951.HK) (effective 6 August), and NEXCHIP (02249.HK) (effective 7 August). No targets were removed in this adjustment.

Trading calendar: No approaching market closure days.

VI. Weekly Summary

After rising at the start of the week, the Hong Kong market pulled back in a range-bound manner this week, with the Hang Seng Index closing slightly lower for the week. The market's core mainline revolved around dense earnings catalysts in innovative drugs, with news such as BEONE MEDICINES' net profit surging 627% and REMEGEN's first large-scale profitability continuously boosting sector sentiment, related ETFs sweeping the gainers board and funds recording sustained net inflows. The large model sector performed prominently under the dual catalysts of MINIMAX's admission to the Connect and Goldman Sachs' upward revisions, with MINIMAX accumulating approximately 28.6% over two days after its admission. CPO/PCB concepts remained active throughout the week, driven by Goldman Sachs' upward revision of AI server market size forecasts. The solar sector rebounded strongly, driven by both policy and futures.

In terms of the Connect mechanism, the week saw multiple important developments: the regulators released signals on including RMB stock trading counters and REITs in the Shanghai-Shenzhen-Hong Kong Stock Connect; the HK Stock Connect eligible securities list was adjusted intensively, with four targets including MINIMAX and NEXCHIP formally admitted; and the second phase of HKEX's minimum spread reduction was implemented. These measures mark the continued deepening of the Connect mechanism and are expected to further broaden the depth and breadth of market connectivity between the two markets.

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