高盛：中国思考-搭上加速南下的列车

Investment Rating - The report raises the 2025 Southbound flow forecast from US$75 billion to US$110 billion, indicating a positive investment outlook for Southbound flows [4][39][41]. Core Insights - Southbound investors have shown strong net buying activity, with US$78 billion in net purchases year-to-date, representing 75$577 billion of HK-listed stocks, accounting for 13% of the market cap of eligible stocks, up from 10% a year ago [2][11]. - The turnover contribution from Southbound investors has increased from 17% in 2024 to 21% year-to-date [2][11]. - The report notes that the Southbound flows have become a significant influence on the Hong Kong market, with a notable increase in ownership and turnover [11][12]. Investor Composition - Both onshore retail and institutional investors are participating in Southbound trading, with institutional investors estimated to account for at least half of the Southbound ownership [3][25]. - Domestic mutual funds have raised their equity allocation to historical highs, contributing to the Southbound inflows [28][39]. Forecast and Drivers - The report forecasts that Southbound flows could reach US$110 billion in 2025, driven by factors such as the attractiveness of H-shares, increased dual-primary listings, and potential dividend tax exemptions for Southbound investors [4][39][43]. - The report highlights that the home-coming of US-listed Chinese companies could further boost Southbound buying, with Alibaba's dual-primary listing serving as a precedent [41][50]. Investment Opportunities - A refreshed Southbound Favorite Portfolio includes 50 companies identified for their scarcity value, valuation discounts, and high sensitivity to Southbound flows, expected to outperform if inflows remain strong [5][49]. - The report also screens for 33 ADRs eligible for HK dual-primary listing, which may benefit from Southbound buying post-inclusion [5][50].