Hong Kong Equity Funds Surpass One Trillion Yuan as Technology Emerges as The Core Allocation Hub

Rising enthusiasm for Hong Kong equities is fueling sustained growth in fund assets. Wind data indicate that from October 1 to November 12, total shares of the Hang Seng Technology ETF expanded by 32.531 billion units. By the end of the third quarter, Hong Kong equity fund assets had grown markedly, breaching one trillion yuan.

Industry observers note that southbound capital, led by public mutual funds, is increasingly a key pillar of the Hong Kong market, with assets steadily scaling up. At the same time, position concentration within Hong Kong equity funds has intensified, which could translate into pronounced net asset value volatility during year‑end style rebalancing.

“On third‑party distribution platforms, many investors are posting in fund comment sections to time their add‑ons and asking about Hong Kong equity prospects—enthusiasm is unmistakable.”

“This year, Hong Kong markets have been very active. Even when we are not featuring Hong Kong equity products in channel roadshows, many financial advisors inquire about opportunities. Based on advisor feedback, clients are actively seeking Hong Kong equity fund offerings.”

These sentiments were repeatedly echoed to Shanghai Securities News reporters in discussions with sales channels and fund managers. Robust investor appetite is driving asset growth. A research report from Sinolink Securities (9.680, 0.06, 0.62%) shows that by the end of the third quarter, Hong Kong equity fund assets crossed the one‑trillion‑yuan threshold, reaching 1,033.008 billion yuan—up 67.98% versus the end of the second quarter. Total fund shares rose to 881.067 billion units, a 42% quarter‑on‑quarter increase.

Passive strategies are the primary engine of expansion, outpacing active management. “Stock Connect index and feeder funds” and “Hong Kong QDII index and feeder funds” recorded third‑quarter‑end asset sizes of 473.832 billion yuan and 383.554 billion yuan, with units of 371.634 billion and 362.536 billion respectively. The “Stock Connect index and feeder funds” segment saw quarter‑on‑quarter growth of 93.37% in assets and 70.32% in units.

According to Sinolink Securities, by the end of the third quarter, equity exposure in Hong Kong funds had increased by 0.75 percentage points from the second quarter to 92.71%. Nearly four‑fifths of Hong Kong equity funds held stock allocations above 90%.

Holdings analysis shows technology and consumer sectors remain the primary aggregation areas, accounting for 37% and 25.16% of positions. “Internet + AI” computing power is a favored theme. The top ten holdings by market value are Alibaba‑W, Tencent Holdings, Xiaomi Corporation‑W (01810.HK), Meituan‑W, Kuaishou‑W, Semiconductor Manufacturing International Corporation (123.100, 3.47, 2.90%), NetEase‑S, BYD Company (99.830, 2.06, 2.11%), JD.com‑SW, and Innovent Biologics.

As Hong Kong equity fund assets expand, the “grouping” pattern is becoming more pronounced. By the end of the third quarter, large‑cap positions (market value above HK$80 billion) held by Hong Kong equity funds represented 93.94% of total heavy holdings’ market value, up 4.05 percentage points from the second quarter. Combined holdings in Alibaba and Tencent Holdings reached 26.87% of heavy positions, a further 3.31‑percentage‑point increase quarter‑on‑quarter.

Multiple industry participants caution that, after prior gains, valuations in Hong Kong technology stocks are no longer inexpensive. With profit‑taking and year‑end rebalancing demands, the market may face a style rotation. Given concentrated sector allocations and convergent heavy holdings among leading funds, a style shift could induce substantial fluctuations in fund net asset values.