Since the beginning of this year, southbound funds have continued to significantly increase their holdings in the Hong Kong stock market, becoming the largest source of incremental capital this year. Data shows that as of July 29th, the cumulative net inflow of southbound funds exceeded HK$840 billion this year, setting a new annual net inflow record and exceeding the net inflow of HK$807.869 billion in 2024. Driven by the substantial inflow of southbound funds, the Hong Kong stock market has performed strongly this year. As of the close of July 29th, the Hang Seng Index had risen by over 27%, and the Hang Seng Tech Index had risen by over 26%. All Hang Seng Index constituents with a total market capitalization exceeding HK$1 trillion rose, with Xiaomi Group-W, the largest gainer, rising by over 60%, and Tencent Holdings, the largest by market capitalization, rising by over 34%. Institutional analysts believe that the cumulative inflow of southbound funds may exceed HK$1 trillion for the entire year, with the pace of inflows likely to slow in the second half of the year. In the medium term, policy support driving fundamental recovery, coupled with continued improvement in the liquidity situation, is expected to lead to further upward movement in Hong Kong stocks.