The scale of capital inflow nearly reached an annual high as investors from mainland China aggressively purchased Hong Kong stocks. As the technology-focused Hang Seng China Enterprises Index continued its sharp rise, demand for high-quality assets and diversification of global investments surged, escalating investment enthusiasm.
According to Bloomberg News on the 22nd (local time), the net inflow of 'southbound capital' from mainland China to Hong Kong reached 2.7 billion Hong Kong dollars (approximately 344 billion won) that day. The cumulative net inflow for this year amounted to 800 billion Hong Kong dollars (139 trillion won), nearing the record high of 808 billion Hong Kong dollars set last year.
The Hang Seng China Enterprises Index has risen 24% so far this year. The stock prices of technology innovators, including DeepSeek, have driven the upward trend, and the flow of mainland investors moving to high-quality stocks in Hong Kong to avoid the relatively sluggish domestic market also played a role. During the same period, the representative index of mainland China, the CSI 300 Index, only increased by 4.7%.
China International Capital Corporation (CICC) noted, "The total inflow of southbound capital this year is likely to exceed 1 trillion Hong Kong dollars." However, there are also forecasts that the inflow rate may slow somewhat in the second half of the year due to funding capacity limits for mutual funds and insurance companies. CICC estimated that mutual funds (pooled investment funds) have an additional buying capacity of 100 billion Hong Kong dollars and insurance companies have 200 billion Hong Kong dollars.
The proportion of southbound transactions is also expanding. The trading volume of mainland capital in the Hong Kong stock market averaged 47% this year, which is about 10 percentage points higher than last year. However, the trading volume of exchange-traded funds (ETFs) remains below 1% of the total, indicating that demand centered on individual investors remains limited.
CICC predicts, "Although the capital allocation capacity of mainland institutional investors towards the Hong Kong market has somewhat decreased, the buying pressure on technology innovation stocks may continue for the time being."