There was HKD1.8 billion, HKD1.7 billion and HKD1.6 billion Southbound Trading net inflow to SMIC (00981.HK), KINGBOARD HLDG (00148.HK) and KB LAMINATES (01888.HK).

There was HKD3.9 billion, HKD2 billion and HKD812.4 million Southbound Trading net outflow from BABA-W (09988.HK), TENCENT (00700.HK) and POP MART (09992.HK).

For Southbound Trading of Shanghai-Hong Kong Stock Connect, SMIC (00981.HK) was the most active stock with highest net inflow of HKD1.6 billion, while BABA-W (09988.HK) was the most active stock with highest net outflow of HKD2 billion.

For Southbound Trading of Shenzhen-Hong Kong Stock Connect, KB LAMINATES (01888.HK) was the most active stock with highest net inflow of HKD835.3 million, while BABA-W (09988.HK) was the most active stock with highest net outflow of HKD1.9 billion.

At close, Southbound Trading net outflow totaled HKD0 , representing 40.39% of the total transaction amount of HKD144.89 billion.
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The Financial Secretary, Paul Chan, continued his visit to Shanghai today (18th) to deepen co-operation between Shanghai and Hong Kong in areas including finance, innovation and technology, as well as trade and commerce, and to further leverage Hong Kong's role as a "super connector" and "super value-adder".

In the morning, Chan met with the Chairman of the China Securities Regulatory Commission, Wu Qing, who was in Shanghai to attend the Lujiazui Forum. The two sides had in-depth exchanges on issues including continuing to support Mainland enterprises to list in Hong Kong, optimising the mutual market access mechanisms between the Mainland and Hong Kong capital markets, and taking forward financial regulatory co-operation between the two places. The Chief Executive Officer of the Securities and Futures Commission of Hong Kong, Julia Leung, also attended the meeting.

Chan then visited the Shanghai Gold Exchange and met with its Chairman, Yu Wenjian, to exchange views on the collaborative development of the gold markets in Shanghai and Hong Kong. He subsequently visited PU DEV BANK (600000.SH) and met with its Chairman, Zhang Weizhong, with discussions focusing on advancing financial co-operation between the two places, in particular supporting finance to better serve Mainland enterprises in expanding their overseas businesses and empowering the innovation and technology ecosystem.
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CSPC PHARMA (01093.HK) announced that the marketing authorisation application for Secukinumab Injection developed by CSPC Megalith Biopharmaceutical Co., Ltd, a subsidiary of the Company, was accepted by the National Medical Products Administration (NMPA) of the People’s Republic of China. The Product has been submitted for registration as a Class 3.3 therapeutic biological product.
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The Securities and Futures Commission (SFC) announced that Hong Kong is targeting to launch Five-Year China Government Bond (CGB) Futures on 3 August 2026. Following an evaluation of market demand and macro environment, five-year CGBs were chosen as the underlying assets for the debut of CGB futures contracts to be traded on HKEX (00388.HK). HKEX has been making the necessary preparations for the launch, which requires the SFC’s approval, and will announce the contract details separately.

The SFC said that, at the end of May 2026, the holding of CGBs by foreign investors was about RMB2 trillion. The launch of CGB futures in Hong Kong will provide international investors with an effective offshore hedging tool to meet their growing need for government bond risk management, thereby facilitating greater participation in the Mainland treasury bond market.
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HSBC Global Investment Research published a China strategy tracking report. The broker had previously highlighted that the AI-led rally in 2H could broaden, motivated jointly by fundamentals (AI data center-related industrials and materials stocks), valuation (consumption-related stocks) and high-dividend plays.

Since then, fundamentals have begun to support the performance of stocks in the energy storage and electronic fabrics industries, while dividend appeal has encouraged investors to seek fundamentally improving and resilient names, such as brokerages, during market pullbacks. What is still missing is the valuation driver.

HSBC Global Investment Research listed six major investment themes and 12 stocks: AI: LUXSHARE PRECISION (002475.SZ), HAN'S LASER (002008.SZ), HONGFA (600885.SH); Commercial Aerospace: YINGLIU (603308.SH), HANBELL PRECISE MACHINERY (002158.SZ); Going Global: WUXI APPTEC (02359.HK), DEYE (605117.SH); New Consumption: BUSYMING (01768.HK), COL (300364.SZ); Price Hikes: YTO EXPRESS (600233.SH); High-quality Dividend Plays: MIDEA GROUP (00300.HK), BANK OF JIANGSU (600919.SH).
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The signing of the first-stage memorandum of understanding (MOU) between the US and Iran is of positive significance in easing tensions and consolidating the momentum of the ceasefire, Lin Jian, spokesperson for the Ministry of Foreign Affairs of the PRC, stated.

China welcomes this development and hopes that all relevant parties, including the US and Iran, will uphold the spirit of contract and earnestly fulfill their commitments.

Lin pointed out that China hopes both the US and Iran will approach the second-stage negotiations with a rational and pragmatic attitude, move toward each other, and make joint efforts to strive for positive outcomes in the next phase of talks.
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JPMorgan listed its top picks in the China AI ecosystem, all rated Overweight, as follows:

Stocks | TPs
ZHONGJI INNOLIGHT (300308.SZ) | RMB430
NAURA (002371.SZ) | RMB700
AMEC (688012.SH) | RMB289
BIDU-SW (09888.HK) | HKD225
KNOWLEDGE ATLAS (02513.HK) | HKD1,400
CHANG ELEC TECH (600584.SH) | RMB110
WEICHAI POWER (02338.HK) | HKD52
VGT (02476.HK) | HKD600
ILUVATAR COREX (09903.HK) | HKD620
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China’s AI ecosystem is far from a simple replication of overseas AI stocks, JPMorgan opined in a report.

On one hand, China’s optical modules/PCB/OSAT players play critical roles in the global supply chain, with leading companies deriving more than 70% of revenue from overseas markets, making them low-cost and highly flexible vehicles to capture the globally expanding USD800 billion AI computing power spending.

On the other hand, the policy-driven localization cycle has created an endogenous growth trajectory independent of global tech volatility, supporting substantial expansion in domestic AI computing capex from 2026 to 2029, a 330% CAGR in domestic inference token demand through 2030, and 41% and 65% growth in domestically produced GPU-supported AI server sales in 2027 and 2028, respectively.

JPMorgan’s top picks within China’s AI ecosystem are detailed in a separate table.

The report noted that AI adoption in China still lags global peers, but the policy-led diffusion agenda and large-scale infrastructure buildout create a credible catch-up pathway. Global LLM commercialization is expanding rapidly, and the broker forecast that the ARR of China’s major LLMs will grow approximately 4-7x in 2026. Chinese LLM providers are competing with value-oriented pricing strategies, expanding global market share.

The broker viewed the core challenge lies in the sustainability of monetization. It considered pricing as the most important signal for valuation premium, and therefore maintained an Overweight rating on KNOWLEDGE ATLAS (02513.HK), while downgrading MINIMAX-W (00100.HK) to Neutral.
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CAOCAO INC (02643.HK) showcased China’s first natively developed Robotaxi, the "Eva Cab", at the International Automotive and Supply Chain Expo (Hong Kong) and officially launched its RoboX strategy, announcing a comprehensive AI transformation to build a globally leading Physical AI mobility technology platform.

The company plans to groom Hong Kong the first global flagship city under its RoboX strategy, exploring intelligent fleet operation models tailored for international cities. Under the RoboX strategy, CAOCAO INC proposed a "Dual 100,000 Plan", targeting the cumulative deployment of 100,000 Robotaxis and 100,000 Robovans by 2030, accelerating the large-scale implementation of its intelligent mobility ecosystem.
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Mary Huen, CEO, Hong Kong and Greater China & North Asia, Standard Chartered, attended the Lujiazui Forum where she delivered a speech and participated in panel discussions. She stated that high-level financial opening requires both innovation and coordination.

Shanghai serves as an onshore financial center supporting China’s high-quality economic development, while Hong Kong is an offshore international platform connecting China with the world, she opined, saying the two cities have different but highly complementary strengths. As Shanghai-Hong Kong collaboration continues to deepen, the scope for China’s financial opening will further expand, and RMB internationalization will gradually move toward broader global allocation.

Huen shared her views from three perspectives: Chinese enterprises going global, asset allocation, and digital finance. First, Shanghai and Hong Kong together are building stronger connectivity between China and the world. Standard Chartered also plays the role of a financial institution "super connector", facilitating more efficient alignment among enterprises, capital and markets. In addition, as the scale of Chinese enterprises expanding overseas increases, demand for cross-border settlement, financing, treasury management and risk hedging is rising, bringing RMB internationalization into an unprecedented "golden window period".

Secondly, Hong Kong is one of the most pivotal platforms linking global capital with opportunities in China. Shanghai and Hong Kong continue to enhance market connectivity, offering unique advantages in terms of convenience and stability. This will attract more capital to participate in the China market and further enhance the influence of Chinese assets in global allocation.
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LEAPMOTOR (09863.HK) held a press conference in Hong Kong today (18th). Senior Vice President Cao Li said the company’s cumulative global deliveries have exceeded 1.5 million vehicles, marking a new development milestone.

In May, global deliveries surpassed 80,000 units, while deliveries for the first five months exceeded 260,000 units, ranking first among emerging nascent automakers. Overseas exports in May breached 20,000 units, and exports for the first five months topped 75,000 units, also ranking first among nascent automakers.

On internationalization, he said LEAPMOTOR’s business now covers more than 40 countries and regions worldwide, with over 2,000 global sales and service outlets. LEAPMOTOR International has achieved annual profitability. In Italy, a traditional automotive powerhouse, the company’s battery electric vehicle (BEV) market share crosses 30%. Going forward, it will establish a dual manufacturing structure in Europe and SE Asia.

He added that the Hong Kong market is a key participant in LEAPMOTOR’s global network strategy. As the company marks its first anniversary of entering Hong Kong, it has positioned the city as an important hub connecting Mainland China, SE Asia and global markets.
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Since the outbreak of the Middle East war, Chinese aluminum stocks have been amid selloff, Citi said in a research report. Share prices of CHALCO (02600.HK) and CHINAHONGQIAO (01378.HK) have lagged behind relevant commodity prices, which the broker attributed to investor concerns over feeble demand amid elevated energy prices, as well as market capital flowing into AI-related tech sectors.

Investors are also concerned about increased supply from Indonesia and China, but Citi viewed such worries overdone. It expected aluminum prices and corporate margins to remain at relatively high levels for an extended period. Strong FCF will continue to support dividend distributions and share buybacks. The recent share price weakness provides a buying opportunity. Citi maintained its Buy rating on CHALCO H shares and CHINAHONGQIAO, with TPs of HKD17.08 and HKD48, respectively.
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China's State Administration for Market Regulation (SAMR) issued yesterday (17th) the "Ten Guidelines on Standardizing Subsidy Practices of Food Delivery Platforms (Draft for Consultation)". MEITUAN-W (03690.HK), Taobao Instant Commerce and JD Food Delivery all expressed steadfast support.

Meituan stated that it will carefully study the guidelines, actively cooperate and implement the regulatory requirements to ensure effective execution. The long-cycle, large-scale subsidies and other irrational competition in the food delivery industry have disrupted normal market order. The introduction of the "Ten Guidelines on Standardizing Subsidy Practices of Food Delivery Platforms (Draft for Consultation)" will clarify compliance boundaries for subsidy practices, effectively curtail "involution-style" competition in the industry and foster standardized and healthy development.

Taobao Instant Commerce noted that a healthy industry ecosystem hinges on clear rules. The company steadfastly supports the regulator in formulating relevant guidelines to promote high-quality industry development. It will work with industry participants to jointly safeguard a fair and orderly competitive environment.

JD Food Delivery also said it strongly agrees with measures to counter involution competition, maintain fair market order and protect the legitimate rights and interests of consumers, merchants and riders. The company has consistently adhered to a quality-focused positioning and pursued a sustainable business model. It will continue to standardize subsidy practices, advance anti-involution efforts and reject vicious low-price competition.
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The China Foreign Exchange Trade System (CFETS) announced that the Governor of the People's Bank of China (PBOC), Pan Gongsheng, stated yesterday morning (17th) at the Lujiazui Forum that six banks - ICBC (01398.HK), ABC (01288.HK), BANK OF CHINA (03988.HK), CCB (00939.HK), BANKCOMM (03328.HK) and CITIC BANK (00998.HK) - were authorized to conduct offshore RMB foreign exchange transactions in the Shanghai Free Trade Zone via the CFETS platform. The foreign exchange trading platform immediately supported the six banks in carrying out CNH FX transactions.

As of 7:00 pm yesterday, the six banks had successfully completed 125 CNH FX transactions, totaling RMB7.238 billion. These included spot transactions between offshore RMB and currencies such as USD, EUR, JPY, HKD, GBP, CAD, AUD, SGD, NZD, CHF, ZAR, TRY and THB, as well as derivatives transactions including forwards and swaps.
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Greenland Group announced that Li Wei, Co-President of the Quality System and President of the Aftermarket Business Department of CATL (03750.HK), recently led a delegation to visit Greenland Group and held a working meeting with Zhang Yuliang, Chairman and President of Greenland Group, reaching broad consensus on cooperation.

The two parties will leverage their respective industrial and resource advantages to advance strategic cooperation and jointly explore collaboration opportunities in areas such as Ningjia Service Experience Centers, zero-carbon park scenario services, and carbon trading platforms.

They aim to build a full-chain innovative cooperation platform integrating energy production, storage, trading and services, jointly promoting new energy development and supporting the national "dual carbon" strategy.
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Optoelectronic interconnect product supplier CREALIGHTS (01191.HK) announced details of its IPO, planning to offer 13.4315 million H shares globally, with approximately 10% for the Hong Kong public offering and about 90% for the international placing.

The offer price is HKD114 per share. With a board lot size of 50 shares, the entry fee is approximately HKD5,757.48. The offer period runs from today (18th) to next Wednesday (24th), with listing expected on 29 June. Huatai International acts as the sole sponsor.

The IPO introduced seven cornerstone investors, including BIWIN STORAGE (688525.SH) and KINGSOFT CLOUD (03896.HK) (KC.US)'s subsidiary Kingsoft Cloud Network, with total subscription amount of approximately RMB763 million.

Based on the offer price of HKD114, net proceeds are estimated at approximately HKD1.415 billion.
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The PBOC conducted RMB248 billion of 7-day reverse repo operations today (18th), with the operation rate unchanged at 1.4%.

Meanwhile, RMB188.5 billion of reverse repos matured, resulting in a net injection of RMB59.5 billion in a single day.
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Hangzhou DeepSeek Artificial Intelligence Basic Technology Research Co., Ltd. (DeepSeek) completed a Series A financing round, raising approximately RMB51 billion, with a post-money valuation of about RMB400 billion, Chinese media reported, citing data from Qichacha APP.

In addition to venture capital institutions, internet giants TENCENT (00700.HK), JD-SW (09618.HK), and NTES-S (09999.HK), as well as new energy leader CATL (03750.HK), appeared on the list of investors.

In DeepSeek's Series A round, founder Liang Wenfeng reportedly contributed about RMB20 billion, making him the largest single investor in this round. TENCENT invested approximately RMB10 billion; the CATL ecosystem invested about RMB5 billion; NTES-S, JD-SW, Monolith Capital and IDG Capital each invested about RMB3 billion; the China National AI Industry Investment Fund, also known as Guozhi Investment, invested about RMB980 million.
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AASTOCKS Financial News
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China Foreign Exchange Trade System (CFETS) announced on Thursday (18th) that the central parity of USD/ RMB lost 34 bps from the previous day to 6.8130.
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AASTOCKS Financial News
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Microsoft Corporation (MSFT.US) has built a sizable business by selling AI models to Chinese enterprises, as ByteDance has been Microsoft’s largest AI customer in recent years, primarily using OpenAI models, with annual spending on Microsoft’s AI and cloud services estimated to breach USD1 billion, Bloomberg cited sources as saying.

Other Chinese technology companies, including Ant Group, MEITUAN-W (03690.HK) and TENCENT (00700.HK), have also invested heavily in AI models through Microsoft’s Azure cloud services.

Microsoft has reportedly established subsidiaries in China to keep pace with local innovation and serve multinational clients. President Brad Smith testified before Congress that Microsoft’s business in China remains relatively small, accounting for only about 1.5% of the company’s total revenue in 2024.

ByteDance, MEITUAN-W (03690.HK) and TENCENT (00700.HK) have not responded to the report, while an Ant Group spokesperson said the company develops its own AI models and that its core products do not rely on external models.
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