Mainland Chinese investors snap up a record amount of Hong Kong stocks

Mainland Chinese investors are flocking to the Hong Kong stock market in record numbers as the Hang Seng Index reaches three-year highs, driven by a surge in tech stocks. On Monday, net mainland Chinese purchases of Hong Kong stocks hit a record 29.62 billion Hong Kong dollars ($3.81 billion), marking the highest level since the launch of the stock connect program between Hong Kong and the mainland.

The stock connect program, which was established in 2014 for Shanghai and 2016 for Shenzhen, allows mainland investors easier access to select stocks traded offshore. The recent surge in net buys via the program has been fueled by increased interest in tech giants like Alibaba and Tencent, which are not traded in mainland China.

China’s commitment to supporting private sector tech innovation and boosting fiscal stimulus measures has further bolstered investor confidence in Hong Kong-listed companies. Last week, China announced plans to increase its fiscal deficit to 4% of GDP, highlighting its pro-growth stance and commitment to driving innovation in the tech sector.

Citi’s global macro strategy team recently upgraded its view on Chinese stocks, particularly the Hang Seng China Enterprises Index, to overweight, while downgrading the U.S. market to neutral. The analysts cited tariff risks as a key reason for their shift in focus, highlighting the strength of China’s tech sector despite external challenges.

As Beijing continues to roll out stimulus measures and support for tech innovation, institutional investors are increasingly turning their attention back to Chinese stocks. Manishi Raychaudhuri, CEO of Emmer Capital Partners, believes that emerging markets, particularly in Asia, present attractive investment opportunities as global stocks recover from recent volatility.

Raychaudhuri emphasized that Hong Kong and China remain top picks for investors, with a focus on internet platforms, consumer-related stocks, and sectors like athleisure and travel. As policymakers in China implement measures to stimulate consumption and support economic growth, the outlook for Hong Kong-listed companies looks promising.

In conclusion, the surge in mainland Chinese investment in the Hong Kong stock market reflects growing confidence in the region’s tech sector and overall economic stability. With China’s continued support for innovation and stimulus measures, Hong Kong-listed companies are poised for further growth and investment opportunities in the coming months.