The Hong Kong stock market is hot! The net inflow of southbound funds has exceeded HK$600 billion since the beginning of this year

Source: China Fund News

The Hong Kong stock market is booming in trading, and the net inflow of funds since the beginning of this year has exceeded HK$600 billion. According to monthly statistics, as of April 22, the southbound funds have had a net inflow of over HK$180 billion since April.

The southbound funds have had a net inflow of over HK$180 billion since April

Wind data shows that since the beginning of this year, the net inflow of southbound funds has reached HK$625.822 billion, with funds mainly flowing into the technology, consumer, and financial industries. In comparison, the net inflow of southbound funds throughout 2024 was HK$807.869 billion.

Since 2025, despite the increased market volatility, southbound funds have continuously increased their positions in Hong Kong stocks. From January to March, the net inflows of southbound funds were HK$125.6 billion, HK$152.8 billion, and HK$160.3 billion respectively; since April, the net inflow of southbound funds has further increased to HK$187.169 billion.

At this stage, southbound funds are "buying the dip". Especially during the week from April 7 to April 11, the net inflow of southbound funds reached as high as HK$82.253 billion; on April 9, southbound funds set a record of inflows exceeding HK$35 billion in a single day.

Funds mainly increased their positions in internet technology giants. Data shows that Alibaba, Tencent Holdings, and Xiaomi Group have had their positions significantly increased, with net purchases of HK$14.2 billion, HK$12.2 billion, and HK$9.6 billion respectively.

Hong Kong stocks have good allocation value, and in the short term, more attention is paid to the impact of internal and external policies on fundamentals

Ping An Securities pointed out in a recent research report that the current tariff negotiations have entered a "tug-of-war". Against the backdrop of policy uncertainties and the increased risk of stagflation in the United States, the volatility in overseas markets will continue. The short-term downward pressure on U.S. stocks still exists. In the follow-up, significant progress in tariff negotiations needs to be seen, or the continuous controllability of inflation needs to bring back the market's expectations of interest rate cuts, and then U.S. stocks may be able to reverse the situation.

Hong Kong stocks have stabilized under the signal of the domestic release of measures to stabilize the economy and the market. In the short term, more attention is paid to the substantial impact of internal and external policies on the fundamentals. Currently, after experiencing a correction, Hong Kong stocks have good allocation value. In terms of structure, it is recommended to pay attention to dividend assets for stable allocation, high-quality assets in the domestic demand consumption fields supported by policies, and high-quality enterprises with higher certainty of performance from a bottom-up perspective. In the medium term, the narrative of the AI industrial transformation and the independent controllability of domestic science and technology will continue, and the main line of domestic AI scientific and technological innovation is still favored.

China Galaxy Securities stated that in the medium and long term, the impact of tariffs on the economy depends on the results of tariff negotiation consultations among various countries and the implementation of tariffs. At the same time, the intensity of China's counter-cyclical macro policy adjustments is expected to increase to offset the impact of external shocks. Currently, the valuation of Hong Kong stocks is at a medium to low level in history, and the investment value is still relatively high.

Paul Chan: Global capital allocation is shifting eastward, and Hong Kong should become a safe haven for global funds

Recently, Paul Chan, the Financial Secretary of Hong Kong, wrote an article pointing out that there is a significant trend of global capital allocation shifting eastward. Data in recent months shows that for the listings of newly listed enterprises on the Chinese mainland, the subscription ratio of foreign capital has increased significantly compared to two years ago. Many multinational financial institutions have expanded their teams and dispatched senior executives in Hong Kong, confirming the confidence of international investors in China's innovative momentum and open policies.

These phenomena reflect two major trends of change: On the one hand, due to the resilience shown by the national economy, breakthroughs in innovative technologies, and the continuous deepening of high-level opening-up policies, international investors are worried about missing out on good investment opportunities on the Chinese mainland; on the other hand, the unilateralism and policy uncertainties of the U.S. authorities have prompted international funds to accelerate the diversification of risks and increase their allocation in the markets of the Chinese mainland and Hong Kong.

Paul Chan believes that doing one's own things with all one's strength and at full speed is the best strategy to deal with challenges at present. First, maintain a safe and stable environment in Hong Kong. Maintaining national security, financial stability, and economic security is the foundation of Hong Kong's prosperity and stability. It is necessary to show the international community that Hong Kong is a safe haven for global funds. Second, continue to tell the international community about Hong Kong's unique status and advantages under the principle of "one country, two systems", especially the free port with zero tariffs, the common law system, and its status as an international financial center, and continuously optimize Hong Kong's business environment.

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