Chinese Investors Fuel Tech Rally in Hong Kong with Record Stock Purchases
On Tuesday, mainland Chinese investors injected HK$22.4 billion (US$2.88 billion) into Hong Kong stocks, extending the technology rally sparked by the DeepSeek announcement. This represents the largest daily purchase since early 2021 and the fourth largest on record since 2016.
The inflow continued Wednesday morning, with southbound investors contributing an additional HK$5.5 billion, which helped erase early losses in the Hang Seng Tech Index. Notably, the Tracker Fund of Hong Kong saw substantial buying of over HK$9 billion.
Despite mild outflows from the exchange-traded fund, the robust inflows indicate a lack of enthusiasm from non-mainland buyers.
The increased investment has reduced the premium between onshore and Hong Kong shares to 34%, approaching a level that has historically triggered premium level rebounds. This raises concerns about a potential narrowing in the outperformance of Hong Kong-listed Chinese shares over their mainland counterparts.
Previously, a record influx of mainland investment led to increased holdings of Hong Kong stocks, followed by a peak in the gauge of Hong Kong-listed Chinese shares.