BEIJING — Mainland Chinese investors are pouring into the Hong Kong stock market at unprecedented levels, driving record purchases as the Hang Seng Index hovers near three-year highs.
On Monday, net mainland Chinese purchases of Hong Kong stocks hit a record HK$29.62 billion ($3.81 billion), according to Wind Information data. This marks the highest level since Hong Kong introduced the Stock Connect program, which facilitates cross-border investment. The Shanghai Connect debuted in November 2014, followed by the Shenzhen Connect in December 2016.
Despite the strong inflows, the Hang Seng Index dipped 0.7% on Tuesday morning, reflecting broader market concerns after a sharp sell-off in U.S. stocks over tariff-related growth fears.
AI and Tech Stocks Lead the Charge
Net purchases via the Shanghai Connect reached HK$18 billion, while those via the Shenzhen Connect totaled HK$11.63 billion. Leading the charge were Alibaba and Tencent, two major Chinese tech firms listed in Hong Kong but unavailable for direct investment in mainland China.
China recently reaffirmed its pro-growth stance, prioritizing private-sector tech innovation and expanding its fiscal deficit to 4% of GDP. This includes enhanced consumer subsidies, further supporting economic momentum.
Global Investors Eye Chinese Equities
In response to these developments, Citi’s global macro strategy team upgraded its rating on Chinese stocks—particularly the Hang Seng China Enterprises Index—to overweight while downgrading U.S. equities to neutral.
“One key reason why we have not been focused on Chinese equities is tariff risk,” Citi analysts noted. “However, China’s tech sector has proven its resilience. DeepSeek demonstrated China’s presence at the global AI frontier, despite export restrictions, followed by Tencent’s Hunyuan AI video generator and Alibaba’s QwQ-32B.”
Hong Kong Stocks: ‘Cheap and Under-Owned’
A renewed interest in Chinese and foreign institutional investments followed Beijing’s aggressive stimulus measures announced in late September. The AI-driven DeepSeek model’s debut in January triggered a global tech rally, further bolstering confidence in Chinese equity.
Manishi Raychaudhuri, CEO of Emmer Capital Partners, believes investors will soon shift funds back into emerging Asian markets, particularly Greater China, once the global downturn stabilizes.
“The stocks are cheap and underowned,” he told CNBC’s ‘Street Signs Asia’ on Tuesday. “We are seeing early signs of a consumption boost, with policymakers taking action since January. While not yet at the desired level, it marks a clear shift from past trends.”
Raychaudhuri remains bullish on Hong Kong-listed internet giants, consumer brands in entertainment, restaurants, and tourism, which stand to benefit from China’s ongoing economic rebound.
As AI innovation accelerates and Chinese stocks regain favor, Hong Kong’s stock market could remain a key player in global investment strategies.
