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On Fri, 28 Mar, 4:02 PM UTC
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[1]
Chinese investors pour record funds into Hong Kong stocks in first quarter
HONG KONG/SHANGHAI, March 28 (Reuters) - Mainland Chinese investors poured into Hong Kong's stock market with a record buying spree in the first quarter, chasing an artificial intelligence frenzy and seeking portfolio diversification. Net inflows from onshore funds into Hong Kong's equity market through the Stock Connect scheme were over HK$435 billion ($55.93 billion) so far this year, the highest quarterly purchases since the scheme was launched in 2014 and above the previous record of HK$373 billion in the first quarter of 2021. Technology giants were among mainland investors' most loved names, driven by a rush into AI H-shares spurred by DeepSeek's breakthroughs and Chinese President Xi Jinping's meeting with industry leaders. Alibaba Group (9988.HK), opens new tab has surged over 60% year-to-date while Tencent Holdings (0700.HK), opens new tab has rallied over 22%, helping push the Hang Seng Tech Index (.HSTECH), opens new tab to among the world's top-performing benchmarks this quarter. The southbound buying spree has been further fuelled by blockbuster initial public offerings (IPOs) such as Mixue, which have attracted significant interest during a drought of mainland-listed A-share offerings. "A-shares don't really have any companies that make you go 'wow' right now," said Jack Zhou, a Shanghai-based retail investor, referring to mainland-listed stocks. "Why should I invest in the old, weak, and struggling ones on the A-shares market instead of buying the good companies in Hong Kong?" he added. The shift has left mainland-listed shares struggling to keep up with their offshore peers amid a weak economic outlook and sluggish domestic consumption. China's benchmark CSI 300 Index (.CSI300), opens new tab eked out barely 2.5% gains so far this year, whereas the Hang Seng Index (.HSI), opens new tab has soared nearly 20%. "Compared with their global peers, mainland Chinese investors have a much lower weight of foreign stocks in their portfolios," Patrick Pan, China equity strategist at Daiwa Capital Markets Hong Kong, said in a note. That has accelerated their outbound investments mainly via the southbound channel and the Qualified Domestic Institutional Investor (QDII) funds, he said. Eddie Yue, CEO of Hong Kong Monetary Authority, said earlier this week that mainland capital accounts for 20% to 30% of Hong Kong's stock market turnover through the stock connect. He said the city is exploring ways to further relax rules on a wealth connect program to facilitate cross-border flows. To be sure, the H-share rally has already shown some signs of exhaustion, with recent market pullbacks suggesting some profit-taking. Meanwhile, the valuation gap between dual-listed shares in mainland China and Hong Kong has narrowed to near the lowest level since 2020, which could lead to some rotation back home. Still the current rally in H-shares appears to be driven by genuine investor confidence rather than policy-driven short-term trading, which could continue if fundamentals follow through, analysts said. "In the past, when you have policy stimulus, it's always the A-shares that rallied because of national team buying," said Mark Davids, portfolio manager and co-Head of Asia Pacific Regional Equities at JPMorgan Asset Management in Hong Kong. "The fact that it's H-shares rallying now indicates real money, real investors, and genuine confidence returning. If this carries on, there's potential for international money, which has been absent from Chinese markets for years, to come back." ($1 = 7.7769 Hong Kong dollars) Reporting by Jiaxing Li in Hong Kong and Li Gu in Shanghai; Editing by Vidya Ranganathan and Rashmi Aich Our Standards: The Thomson Reuters Trust Principles., opens new tab Suggested Topics:Asian Markets
[2]
Chinese investors pour record funds into Hong Kong stocks in first quarter
HONG KONG/SHANGHAI (Reuters) - Mainland Chinese investors poured into Hong Kong's stock market with a record buying spree in the first quarter, chasing an artificial intelligence frenzy and seeking portfolio diversification. Net inflows from onshore funds into Hong Kong's equity market through the Stock Connect scheme were over HK$435 billion ($55.93 billion) so far this year, the highest quarterly purchases since the scheme was launched in 2014 and above the previous record of HK$373 billion in the first quarter of 2021. Technology giants were among mainland investors' most loved names, driven by a rush into AI H-shares spurred by DeepSeek's breakthroughs and Chinese President Xi Jinping's meeting with industry leaders. Alibaba Group has surged over 60% year-to-date while Tencent Holdings has rallied over 22%, helping push the Hang Seng Tech Index to among the world's top-performing benchmarks this quarter. The southbound buying spree has been further fuelled by blockbuster initial public offerings (IPOs) such as Mixue, which have attracted significant interest during a drought of mainland-listed A-share offerings. "A-shares don't really have any companies that make you go 'wow' right now," said Jack Zhou, a Shanghai-based retail investor, referring to mainland-listed stocks. "Why should I invest in the old, weak, and struggling ones on the A-shares market instead of buying the good companies in Hong Kong?" he added. The shift has left mainland-listed shares struggling to keep up with their offshore peers amid a weak economic outlook and sluggish domestic consumption. China's benchmark CSI 300 Index eked out barely 2.5% gains so far this year, whereas the Hang Seng Index has soared nearly 20%. "Compared with their global peers, mainland Chinese investors have a much lower weight of foreign stocks in their portfolios," Patrick Pan, China equity strategist at Daiwa Capital Markets Hong Kong, said in a note. That has accelerated their outbound investments mainly via the southbound channel and the Qualified Domestic Institutional Investor (QDII) funds, he said. Eddie Yue, CEO of Hong Kong Monetary Authority, said earlier this week that mainland capital accounts for 20% to 30% of Hong Kong's stock market turnover through the stock connect. He said the city is exploring ways to further relax rules on a wealth connect program to facilitate cross-border flows. To be sure, the H-share rally has already shown some signs of exhaustion, with recent market pullbacks suggesting some profit-taking. Meanwhile, the valuation gap between dual-listed shares in mainland China and Hong Kong has narrowed to near the lowest level since 2020, which could lead to some rotation back home. Still the current rally in H-shares appears to be driven by genuine investor confidence rather than policy-driven short-term trading, which could continue if fundamentals follow through, analysts said. "In the past, when you have policy stimulus, it's always the A-shares that rallied because of national team buying," said Mark Davids, portfolio manager and co-Head of Asia Pacific Regional Equities at JPMorgan Asset Management in Hong Kong. "The fact that it's H-shares rallying now indicates real money, real investors, and genuine confidence returning. If this carries on, there's potential for international money, which has been absent from Chinese markets for years, to come back." (Reporting by Jiaxing Li in Hong Kong and Li Gu in Shanghai; Editing by Vidya Ranganathan and Rashmi Aich)
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Mainland Chinese investors poured a record HK$435 billion into Hong Kong's stock market in Q1 2025, chasing AI opportunities and seeking portfolio diversification. This surge has boosted tech giants and the Hang Seng Index, outperforming mainland markets.
In a remarkable display of investor confidence, mainland Chinese investors have poured a record-breaking HK$435 billion ($55.93 billion) into Hong Kong's stock market during the first quarter of 2025. This unprecedented influx of capital through the Stock Connect scheme surpasses the previous record set in Q1 2021 by over HK$62 billion 12.
The surge in investment has been largely driven by an artificial intelligence (AI) frenzy, sparked by DeepSeek's breakthroughs and Chinese President Xi Jinping's meeting with industry leaders. This enthusiasm has particularly benefited technology giants listed in Hong Kong:
These gains have propelled the Hang Seng Tech Index to become one of the world's top-performing benchmarks this quarter 1.
Mainland investors are not only chasing AI opportunities but also seeking portfolio diversification. The southbound buying spree has been further fueled by attractive initial public offerings (IPOs) in Hong Kong, such as Mixue, which have garnered significant interest during a period of limited A-share offerings on the mainland 12.
The shift in investor focus has left mainland-listed shares struggling to keep pace with their offshore counterparts. China's benchmark CSI 300 Index has managed only a 2.5% gain so far this year, in stark contrast to the Hang Seng Index's impressive near 20% surge 12.
Eddie Yue, CEO of Hong Kong Monetary Authority, revealed that mainland capital now accounts for 20% to 30% of Hong Kong's stock market turnover through the stock connect. The city is exploring ways to further relax rules on a wealth connect program to facilitate cross-border flows 12.
While the H-share rally has shown some signs of exhaustion, with recent market pullbacks suggesting profit-taking, analysts believe the current rally is driven by genuine investor confidence rather than policy-driven short-term trading 12.
Mark Davids, portfolio manager at JPMorgan Asset Management in Hong Kong, noted:
"The fact that it's H-shares rallying now indicates real money, real investors, and genuine confidence returning. If this carries on, there's potential for international money, which has been absent from Chinese markets for years, to come back." 12
This shift in investor behavior could potentially attract international capital back to Chinese markets, which have seen limited foreign investment in recent years.
The record-breaking investment in Hong Kong stocks by mainland Chinese investors marks a significant shift in market dynamics. Driven by AI enthusiasm, portfolio diversification needs, and attractive IPOs, this trend has the potential to reshape the investment landscape in the region and possibly attract global investors back to Chinese markets.
Reference
[2]
DeepSeek's AI innovation has fueled a significant rally in Chinese stocks, leading to a rotation of investments from India to China. This shift highlights the growing importance of AI in shaping market trends and investor sentiment.
6 Sources
6 Sources
Chinese tech companies are accelerating offshore fundraising plans, buoyed by signs of regulatory easing and the success of AI startup DeepSeek. This shift marks a potential reversal of recent sluggish fundraising activity and could provide Chinese firms with much-needed capital for growth.
2 Sources
2 Sources
Chinese tech ETFs experience significant inflows as investors bet on AI advancements, with DeepSeek's emergence boosting sentiment and easing trade tension fears.
2 Sources
2 Sources
Chinese hedge funds and retail investors are rapidly adopting DeepSeek and other AI tools, transforming the country's $10 trillion fund management industry and challenging traditional investment strategies.
6 Sources
6 Sources
Despite US export restrictions, some Asian hedge funds are investing in Chinese tech companies like Xiaomi and Baidu, anticipating their AI innovations will lead the market in 2025. These firms are developing AI products for China's vast domestic market, with lower valuations compared to US counterparts.
3 Sources
3 Sources
