HK Stock Connect Weekly: HSI Falls 4.52% for the Week as Southbound Outflows Reach HK$17.046 Billion-20261023

I. Weekly Market Overview

In the week from October 20 to October 23, 2026 (four trading days, with the market closed on October 19 for the Chung Yeung Festival), the three major Hong Kong indices moved lower. The Hang Seng Index fell 4.52% for the week to close at 23,093.37; the Hang Seng TECH Index fell 5.76% to 3,871.66; and the Hang Seng China Enterprises Index fell 4.58% to 7,756.25. Average daily turnover for the week was approximately HK$2183 billion, with the four sessions recording HK$190.5 billion, HK$176.6 billion, HK$256.1 billion and HK$249.8 billion respectively, indicating a marked pick-up on Wednesday and Thursday.

Southbound capital recorded net selling on all four trading days: HK$1.723 billion on Tuesday, HK$4.435 billion on Wednesday, HK$9.218 billion on Thursday and HK$1.670 billion on Friday. Southbound capital recorded a net outflow of approximately HK$17.046 billion for the week, comprising HK$8.971 billion via Stock Connect (Shanghai) and HK$8.075 billion via Stock Connect (Shenzhen). Thursday was the largest single-day outflow of the week, while Friday showed a divergence with net selling via Shanghai and net buying via Shenzhen.

II. Review of Hot Sectors This Week

1. Semiconductor and AI Hardware Chain: A Sharp Midweek Sell-off and a Broad Friday Rebound

The semiconductor chain completed a full cycle of sell-off and repair this week. On Tuesday the sector came under pressure with the external market, and SMIC (00981.HK) saw HK$572 million of southbound net selling. Pressure peaked on Thursday: Meta’s results raised concerns over the payback on AI investment, semiconductor equipment maker Lam Research guided below expectations, and the Nasdaq Golden Dragon China Index had fallen 2.35% overnight; the Hang Seng TECH Index fell 5.03% that day, breaking both the 3,900 and 3,800 levels. BIRENTECH (06082.HK) fell 10.56%, HUA HONG GRACE (01347.HK) 9.46%, ILUVATAR COREX (09903.HK) 8.80%, GIGADEVICE (03986.HK) 7.88% and MONTAGETECH (06809.HK) 5.79%. On Friday the sector rebounded together, with GIGADEVICE up 8.62%, BIRENTECH up 5.15%, ILUVATAR COREX up 3.69% and MONTAGETECH up 3.07%; key catalysts were A-share optical communication leaders including Zhongji Innolight, Eoptolink and TFC Optical collectively confirming ample order books at midday, and TrendForce projecting a roughly 20% quarter-on-quarter rise in fourth-quarter DRAM contract prices.

2. Large Models and Platform Economy: Divergence Within the Week, Leadership on Friday

Large model names weakened early in the week and rallied later. On Friday Z.AI (02513.HK) rose 8.29%, MINIMAX-W (00100.HK) rose 16.74% and KUAISHOU-W (01024.HK) rose 4.18%; the same day MiniMax announced the open-sourcing of its M3.1 Flash model, saying usage costs fall 70% and online inference speed rises nearly threefold, with more than 100 trillion tokens processed within 72 hours of launch and day-one integration completed with chipmakers including Huawei Ascend, T-Head, Kunlunxin and Moore Threads. On flows, Z.AI drew HK$1.739 billion of southbound net buying for the week, the largest net purchase of any stock, while TENCENT (00700.HK) drew HK$1.148 billion on Tuesday and saw net selling on Thursday.

3. Pharmaceuticals and Biotech: Licensing Deal Led, Then Gave Back Gains

On Tuesday pharmaceuticals bucked the trend, with HANSOH PHARMA (03692.HK) rising 8.32% to lead Stock Connect gainers that day. The sector gave back gains later in the week: on Thursday GF CSI HK Innovative Drugs Industry ETF(QDII) (513120) fell 6.66%; on Friday the same fund rose 2.38% while EVEREST MED (01952.HK) fell 9.83%, the largest decline among Stock Connect stocks that day. MICOT PHARMA-B (02335.HK) fell 39.92% over the week, the steepest weekly drop among recent listings.

4. Recent Listings and Lock-up Expiries: Selling Pressure Released in Bursts

Recent listings came under clear pressure this week. On Tuesday MANYCORE TECH (00068.HK) fell 25.37% and YUNJI (02670.HK) fell 25.48%, after the former’s lock-up expired on October 16 with 1.599 billion shares released on October 19. On Thursday REALORD TECH (01196.HK) fell 89.81% in a single session to close at HKD 0.275, the largest one-day decline among Stock Connect stocks this week. On Friday recent listings rebounded together, with 51WORLD (06651.HK) up 30.31%, SEER TECH (06106.HK) up 24.91% and BLOKS (00325.HK) up 12.64%.

5. Oil and Gas, and Automobiles: Geopolitical Shocks and Theme Rotation

Oil and gas was driven by geopolitical events: Middle East supply risks escalated on Thursday, lifting Fullgoal S&P Oil & Gas Exploration and Production Selected Industry ETF(QDII) (513350) by 3.12%, before the fund fell 3.16% on Friday as crude retreated. Automobiles took over on Friday, with HK Stock Connect automobile theme ETFs sweeping the top five gainers among HK Stock Connect-related ETFs: GF CSI HK Equities Vehicles Industry Theme ETF (520600) rose 4.11% and ChinaAMC CSI HK Equities Vehicles Industry Theme ETF (159323) rose 3.89%.

6. Robotics Chain: A Broad Rally on Friday

The robotics supply chain rallied broadly on Friday, with ESTUN (02715.HK) up 12.99%, ZHAOWEI (02692.HK) up 16.44% and SEER TECH (06106.HK) up 24.91%. On industry data, the Ministry of Industry and Information Technology said Chinese manufacturers launched more than 400 humanoid robot models and produced over 40,000 units in the first half of 2026, with full-year output expected to exceed 100,000 units; the A-share humanoid robot sector surged in the afternoon the same day, with Unitree, Paslin and Leadshine among the names closing limit-up.

III. Key Stock Connect Events

1. Southbound Capital Posted a Net Outflow of HK$17.046 Billion, Including HK$9.218 Billion on Thursday

Southbound capital recorded net selling on all four trading days, amounting to a net outflow of approximately HK$17.046 billion for the week. Thursday alone saw HK$9.218 billion of net selling, the largest single-day outflow of the week, comprising HK$3.225 billion via Stock Connect (Shanghai) and HK$5.993 billion via Stock Connect (Shenzhen); Stock Connect turnover that day reached about HK$98.2 billion, or 38.4% of main board turnover. Net selling narrowed to HK$1.670 billion on Friday, with HK$2.599 billion of net selling via Shanghai offset by HK$929 million of net buying via Shenzhen.

2. REALORD TECH Plunged 89.81% in a Single Session as Southbound Funds Bought HK$251 Million

On Thursday, REALORD TECH (01196.HK) opened at HKD 2.6 and fell in a straight line, touching HKD 0.246 before closing at HKD 0.275, down 89.81%, with intraday amplitude of 90.15%, a turnover rate of 60.53% and HKD 1.473 billion traded. Southbound capital bought a net HK$251 million of the stock that day, the second-largest net purchase of the session. Public filings show that on October 15, 2026, independent non-executive director Yu Lianghui sold 400,000 shares on-market at an average price of HKD 3.12.

3. HANSOH PHARMA Signed an ADC Licensing Deal with Roche Worth over US$15.5 Billion

On Tuesday, HANSOH PHARMA (03692.HK) closed up 8.32% at HKD 34.380 with turnover of HK$1.208 billion. The company announced on the evening of October 19 that its wholly owned subsidiary and Hansoh Bio entered a strategic collaboration and licence agreement with Roche covering a portfolio of antibody-drug conjugate programmes, under which it will receive a US$400 million upfront payment and a US$110 million anniversary payment, and is eligible for more than US$15 billion in milestone payments plus tiered royalties, for a potential total exceeding US$15.5 billion.

4. BLOKS’ Controlling Shareholder Sold a 1.56% Stake at a Discount via Block Trade

On Thursday, BLOKS (00325.HK) announced that Smart Bloks, a member of its controlling shareholder group, sold 3.849 million shares through a block trade at HKD 65.28 per share, representing about 1.56% of total issued shares and raising about HK$251 million; the stock fell 21.38% that day and rebounded 12.64% on Friday.

5. 51Sim, a Unit of 51WORLD, Joined the NVIDIA Halos SAFE Ecosystem

On Friday, 51WORLD (06651.HK) closed up 30.31% at HKD 65 with turnover of HK$1.181 billion, the top gainer of the day. The company said its subsidiary 51Sim was selected for the NVIDIA Halos SAFE ecosystem, the only Chinese company on the list. It reported first-half 2026 revenue of RMB 124 million, up 129.8% year on year, with 51Sim revenue up 545.2% and its revenue share rising from 14.8% to 41.4%.

6. Industry and Corporate Developments at a Glance

Grouped by leading industry: in computing and hardware, A-share optical communication leaders including Zhongji Innolight, Eoptolink and TFC Optical collectively confirmed ample order books at midday on Thursday, with Eoptolink saying 1.6T modules have entered sustained volume ramp-up and orders from major overseas customers extend into 2027; in large models, MiniMax open-sourced M3.1 Flash with day-one integration across multiple chip platforms while Z.AI drew substantial southbound buying; in robotics, ESTUN completed its acquisition of Kuozhuo and formed an industrial physical AI partnership with the Hong Kong University of Science and Technology and Feidu Technology.

Grouped by type of development: on earnings, CATL (03750.HK) reported third-quarter net profit of RMB 21.246 billion, up 14.54% year on year, on Wednesday, while MONTAGETECH (06809.HK) guided third-quarter net profit at RMB 1.20 billion to RMB 1.30 billion, up 153.6% to 174.7%; on capacity, HUA HONG GRACE (01347.HK) completed the transfer of a 97.4988% stake in Huali Microelectronics and is advancing an RMB 28.278 billion Phase III 12-inch expansion; on shareholder activity, BLOKS’ controlling shareholder sold at a discount while ROBOSENSE (02498.HK) extended loans of up to RMB 20 million in aggregate to its chairman and chief technology officer.

IV. HK Stock Connect-related A-share ETF Rankings (Weekly Focus)

HK Stock Connect-related A-share ETFs maintained the pattern of semiconductors first and innovative drugs second this week. Huatai-PB China Securities Han Stock Exchange China Korea Semiconductor ETF(QDII) (513310) recorded turnover of RMB 10.319 billion, RMB 9.014 billion, RMB 9.090 billion and RMB 17.407 billion across the four sessions, leading the table throughout; it fell 5.04% on Thursday with the semiconductor sell-off and rebounded 2.10% on Friday. GF CSI HK Innovative Drugs Industry ETF(QDII) (513120) recorded RMB 8.843 billion, RMB 5.632 billion, RMB 6.801 billion and RMB 9.865 billion, ranking second on all four sessions; it fell 6.66% on Thursday and rose 2.38% on Friday.

The third tier comprised Hang Seng TECH, Hong Kong securities and internet products: ChinaAMC Hang Seng Technology ETF(QDII) (513180) traded RMB 3.261 billion on Thursday, E Fund CSI Hong Kong Securities Investment Theme ETF (513090) RMB 5.243 billion on Friday and Huatai-PB CSOP Hang Seng Technology Index ETF(QDII) (513130) RMB 3.390 billion on Friday. Structurally, the semiconductor theme combined high turnover with high turnover rates, reflecting frequent positioning between the sell-off and the rebound; the innovative drug theme saw turnover rise day by day, corroborating the licensing-driven rally in individual names; and Hang Seng TECH and internet products provided index-level liquidity.

V. Weekly Wrap-up

Hong Kong equities fell sharply over four trading days, with the Hang Seng Index down 4.52% for the week, the Hang Seng TECH Index down 5.76% and the Hang Seng China Enterprises Index down 4.58%, on average daily turnover of about HK$218.3 billion. The market’s main thread was the sell-off and repair of the semiconductor chain: on Thursday, concerns over the payback on overseas AI investment and a global technology sell-off drove the Hang Seng TECH Index down 5.03% to a fresh stage low, before a broad rebound on Friday supported by A-share optical communication leaders confirming orders and by expectations of higher memory prices. Pharmaceuticals, recent listings, oil and gas, automobiles and robotics rotated, forming a structural market beneath the index volatility.

On flows, southbound capital recorded a net outflow of HK$17.046 billion for the week without a single net buying day, with Thursday’s HK$9.218 billion the peak; the pattern shifted from broad selling to a split between the two channels, with Shenzhen turning to net buying of HK$929 million on Friday. At the stock level, Z.AI, TENCENT and REALORD TECH attracted counter-trend net buying, while ALIBABA-W, SMIC and WUXI BIO led net selling, indicating that rebalancing between AI hardware and platform leaders is still under way.