Korean Capital Flows Into China For Safety, Increasing Holdings In A‑Shares And Hong Kong Stocks As Security Premium Emerges

Amid recent geopolitical turbulence and heightened market volatility, global investors have sought safe‑haven assets, prompting notable net inflows from Korean investors into both China’s A‑share and Hong Kong markets since the outbreak of the Middle East conflict. Between March 2 and March 18, Korean investors registered net purchases totaling USD 19.1557 million across the top 20 A‑share targets, led by Sany Heavy Industry with USD 5.0174 million and Ganfeng Lithium with USD 2.5240 million. Over the same period in Hong Kong, net purchases across the top 20 targets amounted to USD 53.6928 million, with Global X China Electric Vehicle ETF ranking first at USD 19.7513 million and China Energy Engineering second at USD 5.5352 million.

The allocation pattern shows Korean funds favoring companies in engineering construction, energy equipment, utilities and advanced manufacturing—sectors characterized by heavy assets, stable cash flows and relatively high dividend yields—consistent with a defensive, risk‑averse posture. In A‑shares, additional net buys included China Power Construction, Dongfang Electric, Wanhua Chemical and China Jushi. In Hong Kong, purchases extended to China Resources Power, Goldwind Technology, Harbin Electric, China Mobile, China Power International Development and Dongyue Group. These targets, largely concentrated in capital‑intensive industries, have been preferred by Korean investors seeking capital preservation.

Market participants observe that China’s asset base benefits from a complete industrial chain and controllable strategic resources, attributes that have attracted foreign safe‑haven capital and may support the emergence of a “security premium.” Analysts further note that, against a backdrop of accelerating AI adoption and global supply‑chain realignment, China’s physical assets—factories, infrastructure, energy and equipment—exhibit resilience that is less susceptible to automation and algorithmic substitution. Consequently, these HALO‑type assets are viewed as offering both short‑term defensive value and compelling medium‑to‑long‑term allocation merits relative to service‑oriented markets more exposed to AI disruption.