On July 23rd, the Hong Kong stock market witnessed a net sell-off of HK$4.226 billion by northbound capital via the Stock Connect schemes.

Specifically, net selling through the Shanghai-Hong Kong Connect was HK$1.885 billion, while the Shenzhen-Hong Kong Connect saw net outflows of HK$2.341 billion.

The most heavily net bought stocks by northbound funds were MEITUAN-W (03690), Z.AI (02513), and MONTAGE TECH (06809).

Conversely, the stocks with the largest net sales were the Tracker Fund (02800), TENCENT (00700), and BABA-W (09988).

Top Buys by Northbound Capital

MEITUAN-W (03690) received net inflows of HK$641 million.

Recently, the company announced the open-sourcing of its entire LongCat-2.0 model weights, inference engine, and core technical documentation.

This model is reportedly the industry's first trillion-parameter large model trained and inferred entirely on a domestic computing cluster of 50,000 cards, featuring 1.6 trillion total parameters, pre-trained on over 30 trillion tokens, and natively supporting a 1 million token context length.

Analysts at Citi noted that Meituan's open-sourcing of LongCat-2.0 could further solidify its leading position in the local life services market.

Z.AI (02513) attracted net purchases of HK$494 million.

Analysts from CICC stated that Z.AI's GLM series continues to lead domestic models, with GLM-5.2 being the first domestic open-source model to reach the level of Opus-4.8.

The firm believes the model's capability iteration is ongoing and is optimistic about Z.AI's multi-dimensional improvements in model capability, computing power expansion, AI infrastructure optimization, and commercial monetization going forward.

MONTAGE TECH (06809) saw net buying of HK$104 million.

According to public business registration disclosures, the Shanghai Zhiwei Lingfeng Venture Capital Partnership (Limited Partnership) was formally established with a committed capital contribution of RMB 2.1 billion, focusing on venture investments in unlisted companies.

The entity was jointly funded by AMEC and MONTAGE TECH alongside several other institutions.

As leading benchmark companies in China's semiconductor equipment and chip design sectors, the joint move by AMEC and Montage Tech carries significant industrial guidance implications.

CNOOC (00883) received net inflows of HK$53.21 million.

The International Energy Agency (IEA) reported that member countries have released nearly three-quarters of the 400 million barrels of crude oil from the emergency reserve plan announced in March, with this supply to the market expected to be depleted within weeks.

Everbright Securities pointed out that if the US-Iran conflict persists, the crude oil market's regulatory mechanism may fail, potentially leading to more significant market volatility.

AI Hardware Sector Faces Renewed Selling

AI hardware stocks were sold off again, with GIGADEVICE (03986), KB LAMINATES (01888), HUA HONG GRACE (01347), YOFC (06869), and SMIC (00981) experiencing net sales of HK$84.01 million, HK$351 million, HK$420 million, HK$600 million, and HK$892 million, respectively.

Alphabet, the parent company of Google, announced that its second-quarter capital expenditures doubled year-over-year to $44.9 billion, while its free cash flow turned negative to -$5.9 billion, marking its first negative reading in decades.

Concurrently, Alphabet raised its full-year capital expenditure guidance to $195-$205 billion and expects spending to continue growing significantly through 2027.

The market has raised concerns that AI capital expenditures of this magnitude may not be sustainable in the long term.

BABA-W (09988) and TENCENT (00700) saw net sales of HK$1.096 billion and HK$1.54 billion, respectively.

CLSA published a research note stating that Tencent's share price decline yesterday was primarily due to reports that US Treasury Secretary Janet Yellen indicated the US would scrutinize open-source AI models from China to address intellectual property theft concerns.

The firm noted that flagship models from Tencent and Alibaba have far surpassed model distillation techniques and that both companies are core holdings for the majority of global funds.

Recent substantial fund inflows into memory and hardware stocks may exert pressure on their share prices and the broader sector.

The Tracker Fund (02800) experienced net sales of HK$2.519 billion.

Huatai Securities noted that as hedge-related unwinding may be halfway complete and short-selling funds are beginning to accumulate again, considering that A-shares and Korean stocks may gradually confirm a bottom, and with the Hong Kong market sentiment index gradually recovering, a fund-driven rebound could be sustainable on a monthly basis.

However, the core factor for a long-term reversal may still hinge on the quality of fundamental recovery after the earnings season concludes.