Industrial: Who is buying Hong Kong stocks?

Previously, domestic funds represented by southbound capital have always been an important force in increasing their allocation to Hong Kong stocks, and their pricing power in the Hong Kong stock market is gradually increasing. As of February 21, 2025, compared to the end of 2020, the market value of southbound funds through the Stock Connect program has increased by 6.7 percentage points to 11.6%, while the market value of holdings by international intermediaries has decreased by 2 percentage points to 45.6%. Since the Spring Festival, the Hong Kong stock market has seen resonance in increased allocation from global funds. By analyzing the inflow structure of various funds: 1) The "AI+" sector is a consensus between southbound funds and foreign funds, but there are differences in specific areas of increased allocation. Foreign funds have significantly increased their allocation to the software services, information technology equipment, and other upper and middle stream sectors, while southbound funds have increased their allocation not only to professional retail (mainly Alibaba), telecommunications, media and entertainment, and semiconductor sectors, but also to a wide range of "AI+" areas including healthcare, pharmaceuticals, and automotive. 2) In addition to the "AI+" sector, southbound funds continue to flow into dividend sectors, resonating with some Chinese and Hong Kong local intermediary funds. Southbound funds continue to flow into dividend sectors represented by banks, utilities, and insurance, and form resonance with Chinese and Hong Kong local intermediary funds in industries such as utilities and insurance. Looking at the top ten stocks in net inflows from four types of institutions: 1) Southbound funds follow a "dumbbell-shaped" allocation of "technology + dividend", not only significantly flowing into AI leaders such as Alibaba, China Mobile Limited, Kuaishou, and Semiconductor Manufacturing International Corporation, but also continuing to flow into high dividend stocks represented by banks. 2) Foreign funds significantly favor Chinese technology leaders, including Tencent, Xiaomi, Meituan, and SenseTime. 3) Chinese intermediary funds continue to flow into high dividend stocks such as banks, oil companies, and insurance. 4) Hong Kong local intermediary funds notably favor retail, automotive, trendy toys, entertainment, and medical industry stocks. Risk Warning: This is only a compilation of public information and does not involve investment advice or research views.