Analysis-Chinese money fires up Hong Kong shares
SHANGHAI/HONG KONG (Reuters) -Chinese investors are piling into Hong Kong shares lured by lower valuations and the city's strategic position in China's growing rivalry with the United States.
A record $90 billion of cash from the mainland has driven a stellar 21% rally in Hong Kong stocks in the first half of 2025, reshaping the landscape of a market foreign investors have avoided for several years.
"The Hong Kong stock market is being repriced by mainland money," said Chen Dong, fund manager at Hangzhou Ultraviolet Private Fund. Chinese money "is gushing in from various directions in a gold rush," he said.
In stark contrast, China's benchmark CSI 300 has barely moved. Disillusioned with the languid market, low returns and a stuttering domestic economy, domestic investors have shifted money from onshore A-shares to Hong Kong-listed equities, where stocks typically trade at a discount.
Hong Kong's H-share market has gained from robust flows via the cross-border link Stock Connect, a bumper string of initial public offerings (IPOs) and global investors diversifying away from a weakening U.S. dollar.
For 40-year-old Chinese investor Zhu Haifeng, Hong Kong equities now account for 80% of his portfolio.
For a dual-listed company, "you certainly want to pay less for the same assets," said Zhu, who bought Hong Kong-listed shares of Tsingtao Brewery and Guangzhou Baiyunshan Pharmaceutical - both trading at a sharp discount to their Shanghai-traded counterparts.
Mainland investors via Stock Connect now contribute to 50% of Hong Kong's daily stock turnover, up from around 30% at the beginning of 2024, Societe Generale estimates.
Institutional money is gushing in too, causing the gap in dual-listed stocks to compress, although China's capital controls ensure some variance remains.
The average premium of China's A-shares over Hong Kong's H-shares - traditionally high due to bigger volumes and activity in China - has narrowed to a five-year low of under 30%.
RALLY HAS LEGS
The tighter spreads potentially reduce the incentives for mainland investors to buy H-shares, but analysts expect Hong Kong's bull run to continue.
U.S. President Donald Trump's erratic policies, fresh U.S. rate cuts and bets on China's technological innovations will drive more money into the former British colony.
High-dividend bank shares in Hong Kong have attracted yield-focused investors such as Ping An Insurance and China Life, as long-term treasury yields flirt with record lows.
The dividend yield of an index tracking Hong Kong-listed Chinese companies stands at 3.7%, higher than the 2.9% ratio for Chinese benchmark CSI 300 according to LSEG data. That compares with China's 10-year bond yield of 1.65%.
Hong Kong has evolved into a proxy of "national champions," Linda Lam, head of equity advisory for North Asia at UBP said, referring to Hong Kong's tech-heavy listings.
In comparison, mainland A-shares have a lot more macro-sensitive sectors, weighing on investor sentiment, she said.
Goldman Sachs this month published a list of 10 "prominent" Chinese companies with "buy" recommendations, most of which are not listed on the mainland.
They include Tencent Holdings, Alibaba Group and Xiaomi - companies invested in artificial intelligence and holding sway in China's tech war with the United States.
Guo Changzhen, a retail investor based in China's central Henan province, started buying Hong Kong's high-dividend shares late last year.
"Chinese bond yields are low, deposit rates are low, so where else do you put money without too much risk-taking," said Guo, who owns Chinese companies listed in Hong Kong but not at home.
Wang Yi, chief investment officer of CSOP Asset Management, said he remains bullish on Hong Kong stocks.
"We have seen more global investors turning their attention back to the market," he said.
Hashtags

Try Our AI Features
Explore what Daily8 AI can do for you:
Comments
No comments yet...
Related Articles
Yahoo
29 minutes ago
- Yahoo
Clear Secure Stock Gets Relative Strength Rating Lift
The Relative Strength (RS) Rating for Clear Secure stock entered a higher percentile Friday, as it got a lift from 70 to 79. When To Sell Stocks To Lock In Profits And Minimize Losses This exclusive rating from Investor's Business Daily tracks market leadership with a 1 (worst) to 99 (best) score. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
Yahoo
an hour ago
- Yahoo
CEO of Russia-backed Indian refiner Nayara resigns after EU sanctions, sources say
(Refiles to fix formatting) By Nidhi Verma NEW DELHI (Reuters) -Russia-backed Indian refiner Nayara Energy has named a new chief executive after its previous CEO resigned following European Union sanctions that targeted the company, four sources with knowledge of the matter said on Friday. The reshuffle at the top is the latest disruption for the company since the EU announced a new round of sanctions last Friday directed at Russia over its war in Ukraine. This week, a tanker carrying Russian Urals crude was diverted away from Nayara's Vadinar port to unload its cargo at another port in western India, Reuters reported. That came after two other tankers skipped loading refined products from Vadinar, Reuters reported. Mumbai-based Nayara has appointed company veteran Sergey Denisov as chief executive to replace Alessandro des Dorides, the sources said. Denisov's appointment was decided at a board meeting on Wednesday, they said. Nayara Energy did not immediately respond to a request for comment. Des Dorides, who joined Nayara Energy in April 2024, for a three-year term, did not immediately respond to a message sent on LinkedIn. In its announcement of his appointment last year, Nayara described Des Dorides as a 24-year veteran of the energy industry. He left Italian major Eni in 2019 after about six months as head of oil trading and operations. Denisov has been with Nayara since 2017. His LinkedIn profile describes him as Nayara's chief development officer. In recent days, Nayara's website has no longer carried pages listing its leadership. The company is one of India's two major private-sector refiners, along with the larger Reliance Industries. The pair have been India's biggest buyers of discounted Russian crude. Nayara, which operates India's third-biggest refinery at Vadinar in western Gujarat state, typically exports at least four million barrels of refined products per month, including diesel, jet fuel, gasoline and naphtha. It also operates more than 6,000 fuel stations. The 400,000 barrels per day (bpd) Vadinar refinery is equivalent to nearly 8% of India's total refining capacity of about 5.2 million bpd. Nayara Energy has criticised the EU's "unjust and unilateral" decision to impose sanctions. Russia's Rosneft holds a 49.13% stake in Nayara and a similar stake is owned by a consortium, Kesani Enterprises Co Ltd, led by Italy's Mareterra Group and Russian investment group United Capital Partners, according to a 2024 note by India's CARE Ratings agency. India, which has become the top importer of seaborne Russian oil in the aftermath of Moscow's Ukraine invasion, has also criticised the EU's sanctions. Rosneft, which said the sanctions on Nayara were unjustified and illegal, did not immediately respond to a request for comment.
Yahoo
an hour ago
- Yahoo
China Premier Warns of AI ‘Monopoly' as US Effort Quickens
(Bloomberg) — China will spearhead the creation of an international organization to jointly develop AI, the country's premier said, seeking to ensure that world-changing technology doesn't become the province of just a few nations or companies. Trump Awards $1.26 Billion Contract to Build Biggest Immigrant Detention Center in US The High Costs of Trump's 'Big Beautiful' New Car Loan Deduction Can This Bridge Ease the Troubled US-Canadian Relationship? Trump Administration Sues NYC Over Sanctuary City Policy Artificial intelligence harbors risks from widespread job losses to economic upheaval that require nations to work together to address, Premier Li Qiang told the World Artificial Intelligence Conference in Shanghai on Saturday. That means more international exchanges, Beijing's No. 2 official said during China's most important annual technology summit. Li didn't name any countries in his short address to kick off the event. But Chinese executives and officials have taken aim at Washington's efforts to curtail the Asian country's tech sector, including by slapping restrictions on the export of Nvidia Corp. chips crucial to AI development. On Saturday, Li acknowledged a shortage of semiconductors was a major bottleneck, but reaffirmed President Xi Jinping's call to establish policies to propel Beijing's ambitions. The government will now help create a body — loosely translated as the World AI Cooperation Organization — through which countries can share insights and talent. 'Currently, key resources and capabilities are concentrated in a few countries and a few enterprises. If we engage in technological monopoly, controls and restrictions, AI will become an exclusive game for a small number of countries and enterprises,' Li told hundreds of delegates huddled at the conference venue on the banks of Shanghai's iconic Huangpu river. China and the US are locked in a race to develop a technology with the potential to turbocharge economies and — over the long run — tip the balance of geopolitical power. This week, US President Donald Trump signed executive orders to loosen regulations and expand energy supplies for data centers — a call to arms to ensure companies like OpenAI and Google help safeguard America's lead in the post-ChatGPT era. At the same time, the breakout success of DeepSeek has inspired Chinese tech leaders and startups to accelerate research and roll out products such as open-sourced models, robots and AI agents. That parade of technology represents Chinese developers' efforts to set world standards and benchmarks, and grab a bigger slice of the global market. They also dovetail with Beijing's broader efforts to ensure self-reliance on critical technologies in the face of tensions between the world's economic superpowers. The weekend conference in Shanghai — gathering star founders, Beijing officials and deep-pocketed financiers by the thousands — is designed to catalyze that movement. The event, which has featured Elon Musk and Jack Ma in years past, was launched in 2018 to showcase China's cutting-edge technology. This year's attendance may hit a record because it's taking place at a critical juncture in the global race to lead the development of generative AI. It's already drawn some notable figures: Nobel Prize laureate Geoffrey Hinton and former Google chief Eric Schmidt were among industry heavyweights who met Shanghai party boss Chen Jining on Thursday, before they were due to speak at the conference. Going forward, China will seek to propel AI development in the Global South, Li said, referring to a loose gathering that includes Brazil and Africa. Schmidt later echoed Li's call for nations to work together — particularly China and the US. 'The upsides are phenomenal,' he told delegates. 'As the largest and most significant economic entities in the world, the United States and China should collaborate on these issues,' he said. 'We have a vested interest to keep the world stable, keep the world not at war, to keep things peaceful, to make sure we have human control of these tools.' —With assistance from Jing Li and Charlie Zhu. (Updates with Schmidt's comments from the 11th paragraph.) Burning Man Is Burning Through Cash Confessions of a Laptop Farmer: How an American Helped North Korea's Wild Remote Worker Scheme It's Not Just Tokyo and Kyoto: Tourists Descend on Rural Japan Elon Musk's Empire Is Creaking Under the Strain of Elon Musk A Rebel Army Is Building a Rare-Earth Empire on China's Border ©2025 Bloomberg L.P. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data