Since the second half of 2026, major global stock markets have experienced divergent trends, with the Hang Seng Index becoming one of the few indices to record positive returns. At the same time, southbound funds continue to flow back. As of September 29th, the cumulative net purchases since July have exceeded HKD 100 billion, forming a combination of "liquidity liquidity+valuation depression" with sector valuations still at historical lows. As one of the early public institutions in the industry to establish a specialized overseas investment research team, ICBC Credit Suisse has formed a product line covering on exchange index tools and QDII cross-border products in the Hong Kong stock market, including the Hong Kong Stock Connect Technology 30 ETF ICBC (159636. SZ), Hong Kong Stock Connect Innovative Medicine ETF ICBC (159217. SZ), ICBC Hong Kong Small and Medium Cap Stocks (QDII) (RMB share 002379, USD share 002380), etc.

Southbound funds increase investment in Hong Kong stock technology

The flow of funds is the most direct window to observe the current Hong Kong stock market trend.

According to Wind data, in July 2026, southbound funds net bought HKD 62.87 billion into Hong Kong stocks, an increase of over 130% compared to HKD 27.111 billion in June; Continued net purchases of HKD 10.38 billion in August; Entering September, as of the 29th of the month, net purchases have reached HKD 53.912 billion. Since the beginning of this year, a total net purchase of HKD 428.188 billion has been made, with capital inflows accelerating in the second half of the year.

From the perspective of market performance, Wind data shows that as of September 29th, the Hang Seng Index has risen 7.18% since July, performing well among important global indices. Among them, technology leaders and dividend assets have become the main directions for southbound funds to increase their holdings, with the proportion of increasing holdings in multiple technology stocks exceeding 100%.

Multiple institutions believe that this round of rebound in Hong Kong stocks is accompanied by a significant return of southbound funds. In the volatile market environment, the allocation value of Hong Kong stock assets has received attention.

The valuation percentile is within a reasonable range

While funds continue to flow in, the valuations of Hong Kong's technology and innovative drug sectors remain in a historically relatively low range.

Taking the China Securities Hong Kong Stock Connect Technology Index tracked by ICBC Credit Suisse's Hong Kong Stock Connect Technology 30 ETF ICBC (159636. SZ) as an example, Wind data shows that as of September 29, 2026, the price to earnings ratio (PE-TTM) of the index is about 24 times, which is at a relatively low percentile. If observed over a longer period of time, its valuation percentile is also relatively low.

From the perspective of composition structure, 30 leading technology listed companies with large market capitalization, high R&D investment and good revenue growth were selected as samples by the CSI Hong Kong Stock Connect Science and Technology Index, covering a number of subdivisions of Hong Kong stock technology sectors such as the domestic Internet, semiconductor, smart cars, and biomedicine. As of June 30, 2026, the interim report data shows that the top ten weighted stocks have a total weight of about 80%, covering industry leaders with high market value and liquidity rankings within the scope of the Hong Kong Stock Connect, with outstanding leadership attributes.

Fundamentally, two major industrial trends are strengthening the medium - and long-term logic of the sector: first, AI commercialization process is accelerating, leading Internet companies continue to increase AI related investment, large model iteration and application implementation are advancing, and the transmission progress of related investment to the profit end has become the focus of follow-up observation; Secondly, the trend of innovative drugs going global continues, and domestic innovative pharmaceutical companies' progress in overseas authorization and cooperation has attracted market attention, providing new growth dimensions for the sector. In summary, the sector has the dual characteristics of "relatively low valuation" and "relatively high prosperity", providing both valuation and fundamental support for the medium and long-term performance of Hong Kong's technology assets and innovative drug assets.

Hong Kong Stock Product Matrix

Faced with changes in the valuation and prosperity of Hong Kong stocks, the market's attention to related product tools has increased. As one of the early public institutions in the industry to establish a specialized overseas investment research team, ICBC Credit Suisse has formed a product line covering both on and off the market, index tools, and active management in the Hong Kong stock technology track with cross-border investment research capabilities that combine global perspectives with local research.

In terms of on-site index tools, the Hong Kong Stock Connect Technology 30 ETF ICBC (159636. SZ) closely tracks the CSI Hong Kong Stock Connect Technology Index, pursuing the minimization of tracking deviation and tracking error; The China Securities Hong Kong Stock Connect Innovation Drug ETF ICBC (159217. SZ) tracks the CSI Hong Kong Stock Connect Innovation New Drug Index, which focuses on the core links of innovative drug research and development and production, and timely clears samples with weakened attributes of innovative drugs through quarterly adjustment mechanisms. Both of the above products support same day revolving trading (T+0).

In terms of cross-border active management, ICBC Hong Kong Small and Medium Cap Stocks (QDII) (RMB share 002379, USD share 002380) mainly invest in small and medium-sized Chinese concept stocks listed in Hong Kong, continuously focusing on investment opportunities brought by new business models and policy supported industries in economic transformation, and striving to obtain investment returns that exceed performance benchmarks. According to Morningstar data, as of June 30, 2026, the fund's RMB shares have ranked 8/32, 5/21, and 4/16 in the same category of QDII Greater China stocks in the past three, seven, and ten years.

Systematic investment research and cross-border risk control safeguard long-term investment

The underlying support of the product matrix is the overseas investment and cross-border risk control capabilities that ICBC Credit Suisse has long honed.

After years of accumulation, ICBC Credit Suisse has built a complete cross-border product line covering global stocks, key regional markets, and Greater China, and has created a professional investment research team of over 230 people with an average of more than 12 years of experience. The talent system is mainly based on internal independent training, ensuring the orderly inheritance of long-term value investment concepts. In the field of cross-border investment, the overseas investment research team combines a global perspective with regional deep cultivation capabilities, and maintains continuous tracking and research on key markets such as Hong Kong stocks. At the same time, the company has established a full chain risk control system of "pre screening, in-process control, and post attribution", and extended the assessment cycle to three to five years, guiding the investment research team to focus on the long-term growth of the industry through institutional guidance.

For ordinary investors, Hong Kong stocks have both growth and volatility. ICBC Credit Suisse's products in the three directions of index based, cross-border proactive, and Hong Kong Stock Connect themes have differences in investment scope, operation methods, and risk return characteristics. Investors can choose based on their own risk tolerance and a full understanding of the product situation. Its transparent and clear style index tools, as well as active management products based on in-depth research, are in line with the concept of long-term investment and value investment, and also echo the idea of long-term funds focusing on cross cycle holding.

Data Description:

The company's investment research team and other data sources are from ICBC Credit Suisse, and the data is as of June 30, 2026.

The performance ranking data is sourced from Morningstar, calculated as of June 30, 2026, for QDII Greater China stocks in the same category.

Explanation of Fund Expenses:

1. The on exchange trading fees for the Hong Kong Stock Connect Technology 30 ETF Industrial and Commercial Bank of China are subject to the actual fees charged by the securities company. When investors subscribe/redeem fund shares, the subscription and redemption agent securities firm may charge a commission of no more than 0.5%, including relevant fees charged by securities exchanges, registration agencies, etc. The management fee for this fund is 0.45% per year, and the custody fee is 0.07% per year.

2. The on exchange trading fees of the Hong Kong Stock Connect Innovative Drug ETF Industrial and Commercial Bank of China are subject to the actual fees charged by the securities company. When investors subscribe/redeem fund shares, the subscription and redemption agent securities firm may charge a commission of no more than 0.5%, including relevant fees charged by securities exchanges, registration agencies, etc. The management fee for this fund is 0.4% per year, and the custody fee is 0.07% per year.

3. The management fee for ICBC Hong Kong's small and medium-sized stocks is 1.20%, and the custody fee is 0.20%. Subscription rate: When the subscription amount is M and M<1 million yuan, the rate is 1.50%; When 1 million yuan ≤ M<3 million yuan, the rate is 1%; When 3 million yuan ≤ M<5 million yuan, the rate is 0.80%; When M ≥ 5 million yuan, 1000 yuan per transaction. Redemption rate: When the holding date is N and N<7 days, the rate is 1.50%; When 7 days ≤ N<30 days, the rate is 0.75%; When 30 days ≤ N<1 year, the rate is 0.50%; When 1 year ≤ N<2 years, the rate is 0.30%; When N ≥ 2 years, the rate is 0%.

Risk Statement

The fund manager manages and utilizes the fund assets in accordance with the principles of due diligence, honesty, prudence, and diligence, but does not guarantee that the fund will always make a profit, nor does it guarantee a minimum return. Funds investing in overseas securities markets, which are at different stages of the industrial cycle in various countries or regions, will have an impact on the investment performance of the fund; There are no upper or lower limits on the daily trading prices of securities in overseas securities markets, and the daily fluctuation range of securities is relatively large, which may bring about sharp market fluctuations. The Hong Kong Stock Connect Technology 30 ETF ICBC Fund, Hong Kong Stock Connect Innovative Medicine ETF ICBC Fund, and ICBC Hong Kong Small and Medium Cap Stock Fund are equity funds with higher expected returns and risk levels than hybrid funds, bond funds, and money market funds. If a fund can invest in the underlying stocks of the Hong Kong Stock Connect, it also needs to bear exchange rate risks and unique risks caused by differences in investment environment, investment targets, market systems, and trading rules under the Hong Kong Stock Connect mechanism. Past performance of a fund does not predict future performance, and the performance of other funds managed by the fund manager does not constitute a guarantee of fund performance. Funds carry risks, and investors should carefully read relevant legal documents such as the Fund Contract, Prospectus, Fund Product Information Summary, and updates. Based on a comprehensive understanding of the product situation, fee structure, charging standards of various sales channels, and listening to the suitability opinions of sales institutions, they should choose investment products that match their own risk tolerance and invest with caution.