Southern-bound funds have net bought over 300 billion Hong Kong dollars since the beginning of this year, and the inflow trend is expected to continue.

Since the beginning of this year, Southbound funds have been continuously increasing their positions in the Hong Kong stock market, making it the largest source of incremental funds for the market. Data from Wind shows that as of June 16, Southbound funds have accumulated a net inflow of over 300 billion Hong Kong dollars this year. In the past month, the information technology, industrial, and financial sectors have been favored by Southbound funds and have been significantly increased. In terms of market performance, there has been a divergence among different sectors in the Hong Kong stock market. As of the close of June 16, the Hang Seng Index has fallen by more than 4% year-to-date, while the Hang Seng Tech Index has fallen by over 15%. Traditional sectors such as conglomerates, industrial, and energy have led the market. Institutional investors believe that Southbound funds are expected to remain the largest source of incremental funds for the Hong Kong stock market in the second half of the year, with an expected net inflow of 310-440 billion Hong Kong dollars. In the short term, the Hong Kong stock market is expected to rally, and there is significant room for upside recovery in the Hang Seng Tech sector.