Chinese investors have poured a record 680 billion yuan ($94.8 billion) into the Hong Kong stock market in the first half of the year. This has helped boost gains in Hong Kong, contrasting with a lackluster performance in mainland markets. Net buying of Hong Kong stocks through the stock connect program has doubled compared to the previous year.
The stock connect program allows mainland and Hong Kong investors to trade designated shares in each other’s markets. The total investment in the first six months is already close to the 744 billion yuan recorded for the full year in 2024. Earlier this year, excitement over a homegrown artificial intelligence boom drove investment from the mainland into big tech stocks listed on the Hong Kong Exchange.
The surge in investment is attributed to a migration of global capital away from the U.S. dollar.
Mainland investors boost Hong Kong stocks
This has fueled a bullish sentiment in Hong Kong’s equities market.
Analysts believe the rally has more momentum and forecast continued inflows from mainland China. The AH Premium Index measures the performance of Chinese shares that are dual-listed in Shanghai and Hong Kong. It hit its lowest in five years earlier this year but has shown significant recovery due to the influx of mainland capital.
Investment flows in the southbound channel of the Stock Connect scheme have shown robust figures. This underlines sustained interest from Chinese investors in Hong Kong’s market. As of now, market dynamics suggest that the positive trend will continue.
This is provided the yield differential between Chinese and Hong Kong assets remains favorable.
