On August 18, a senior official from China's National Financial Regulatory Administration met with senior officials from Hong Kong's Financial Services and the Treasury Bureau to discuss the latest developments in the two markets and ways to support Hong Kong's role as an international financial center, according to Jiemian News. The NFRA said it supports mainland insurance funds participating in mainland-Hong Kong financial market connectivity and supports mainland insurers investing in Hong Kong exchange-traded funds through Stock Connect.

The article also said Hong Kong stocks have been a key destination for global capital reallocation since July. As of August 5, southbound funds and international intermediaries had recorded net inflows of HK$75.1 billion and HK$6.9 billion, respectively, while foreign investors had returned to the market from mid-July, with cumulative net inflows exceeding HK$60 billion since July 16.

CICC said the rebound in Hong Kong stocks since late June has been driven almost entirely by valuation, with the Hang Seng Index's forward price-to-earnings ratio back above its 10-year average. It also said active equity mutual funds' allocation to Hong Kong stocks fell to 15.1% in the second quarter, the lowest since the third quarter of 2022, suggesting room for further capital replenishment. The firm added that a breakout from the current range may still require policy support or technology-related catalysts.

The article said Southern East Select (03441.HK) has also attracted inflows as investors move into high-dividend stocks. Southbound funds bought about HK$51 million of the product in the week to August 12, ranking first among net inflows; over the past month and past three months, it recorded inflows of about HK$131 million and HK$208 million, respectively. Its net asset value rose 2.29% in the week and 10.08% over the past three months, ranking first in three-month returns among the products listed in the article.