Mainland Chinese investors have made unprecedented moves in the Hong Kong stock market, purchasing a record HKD 29.62 billion (USD 3.81 billion) worth of stocks on Monday, according to Wind Information database. This colossal investment was facilitated through the Shanghai and Shenzhen stock connect programs, which allow mainland investors to trade in Hong Kong's stock market. The Shanghai Connect, launched in November 2014, accounted for nearly HKD 18 billion of net buys, while the Shenzhen Connect, which began in December 2016, contributed HKD 11.63 billion.
Shares of Alibaba and Tencent were at the forefront of these purchases. Both companies are not traded in mainland China, making their Hong Kong-listed shares a focal point for mainland investors. The fervor for these stocks illustrates a strong interest in major internet platforms from mainland investors.
Meanwhile, the Hang Seng Index, a prominent benchmark for Hong Kong stocks, experienced a slight dip, trading around 0.7% lower on Tuesday morning. Despite this decrease, the index remains near its three-year highs, reflecting sustained investor confidence.
Citi's global macro strategy team has recently adjusted its stance on Chinese stocks, upgrading them to overweight while downgrading U.S. stocks to neutral. This shift highlights changing sentiments towards Chinese equities amid evolving geopolitical and economic conditions. The Hang Seng China Enterprises Index serves as a key indicator for Chinese stocks, further underscoring the strategic importance of these investments.
In a statement, Citi's global macro strategy team elaborated on their perspective:
"Abstracting from this issue, we believe the case for China tech was clear. A) DeepSeek proved that China tech is at the Western technological frontier (or beyond), despite the export controls. This was followed by the release of Tencent's Hunyuan (an AI video generator) and Alibaba's QwQ-32B."
Manishi Raychaudhuri also commented on the attractiveness of Hong Kong and Chinese stocks:
"I would say largely it would still be Greater China, which means largely Hong Kong, China. The stocks are cheap and under-owned."
This record-breaking investment comes amidst efforts to boost consumption in China. Policymakers have been actively working since January to stimulate economic activities, albeit not to the full extent desired by market participants.
Leave a Reply