Hong Kong’s stock exchange reported its highest quarterly profit in nearly four years after China’s stimulus measures boosted trading and listing volume.
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BEIJING — Mainland Chinese investors are piling into the Hong Kong stock market at record volumes as its tech-heavy Hang Seng Index trades around three-year highs.
Net mainland Chinese purchases of Hong Kong stocks hit a record 29.62 billion Hong Kong dollars ($3.81 billion) on Monday, according to the Wind Information database.
That was the most since the Hong Kong stock market launched its “connect” program with the mainland, allowing local investors easier access to a select number of stocks traded offshore. The Shanghai Connect launched in November 2014, while the Shenzhen Connect opened in December 2016.
The Hang Seng Index traded around 0.7% lower Tuesday morning following a sharp sell-off in U.S. stocks overnight on worries about the impact of tariffs on global growth.
Net buys via the Shanghai Connect reached nearly 18 billion HKD on Monday, while those from the Shenzhen Connect reached 11.63 billion HKD, the data showed.
Hong Kong-traded shares of Alibaba and Tencent, both of which are not traded in mainland China, saw the largest net purchases, according to Wind data.
China last week affirmed its pro-growth stance by emphasizing plans to support private sector tech innovation, and increasing its fiscal deficit to a rare 4% of gross domestic product — including an expanded consumer subsidies program.
Citi’s global macro strategy team on Monday upgraded its view on Chinese stocks — namely the Hang Seng China Enterprises Index — to overweight, while downgrading the U.S. to neutral.
“One key reason why we have not been focused on Chinese equities is tariff risk,” the analysts said.
“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,” they added.
‘Cheap and under-owned’ stocks
Chinese and foreign institutional investors started piling back into Chinese stocks after Beijing started announcing more forceful stimulus plans in late September. Chinese equities got another boost after the emergence of DeepSeek’s latest model in late January prompted a global tech sell-off. More major tech companies are traded in Hong Kong than in mainland China.
Manishi Raychaudhuri, CEO of Emmer Capital Partners, said investors could soon pour money back into emerging markets, particularly Asian emerging markets, once global stocks emerge from the current rut.
“I would say largely it would still be Greater China, which means largely Hong Kong, China. The stocks are cheap and under-owned,” Raychaudhuri told CNBC’s “Street Signs Asia” on Tuesday.
“We have seen some degree of consumption boost in the form of what the policymakers have been doing since January. It is not yet to the full extent that the market would like to have but at least it is a departure from the trend of many years,” he continued.
“So, right on top of my list, it would still be Hong Kong, China, the internet stocks, the large internet platforms and also some of the consumption-related names, mostly in athleisure, the restaurant stocks and other travel and tourism-related names,” Raychaudhuri said.
— CNBC’s Sam Meredith and Anniek Bao contributed to this report.