Chinese money fires up Hong Kong shares
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 (.CSI300), opens new tab 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 (.HSCE), opens new tab 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 (.HSCAHPI), opens new tab - traditionally high due to bigger volumes and activity in China - has narrowed to a five-year low of under 30%.
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 (601628.SS), opens new tab, as long-term treasury yields flirt with record lows.
The dividend yield of an index tracking Hong Kong-listed Chinese companies (.HSCE), opens new tab stands at 3.7%, higher than the 2.9% ratio for Chinese benchmark CSI 300 (.CSI300), opens new tab 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 (0700.HK), opens new tab, Alibaba Group (9988.HK), opens new tab and Xiaomi (1810.HK), opens new tab - 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.
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Reuters
20 minutes ago
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By summer, however, China was once again exporting critical rare earth to the U.S. and Nvidia had re-started the sales of its AI chips to China, suggesting a burgeoning trade detente between the world's two largest economies. Amid this volatility, China's capital markets have responded favorably. The MSCI China Index has surged around 25% year-to-date through July 25, outpacing the MSCI All-Country World index's 12% gain and the S&P 500 index's 9% rise. Notably, this strong performance has been driven not just by typical business-cycle fluctuations, but also an appeal rooted in innovation, collaboration and youth culture, suggesting China's next growth cycle could look very different from those in the past. China's evolution from low-cost imitator to global innovator is epitomized by its electric vehicle dominance. 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Moreover, Chinese tech giants like Huawei and Tencent rank among the top corporate sponsors of Apache and Linux foundations, major nonprofit organizations that shape foundational technologies like artificial intelligence and cloud computing. DeepSeek's R-1 model exemplifies this strategy. Released under the permissive MIT license, it grants large-scale commercial reuse rights (unlike Google's Apache 2.0 or Meta's Llama licenses) and has fueled countless derivative models globally. Such openness has the potential to build developer loyalty, influence AI standards, and circumvent geopolitical friction. This shift has been underpinned by a focus on developing scientific prowess. In 2024, China led the world in high-quality research publications, according to Nature, holding the top spot for the second consecutive year. 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Check out Reuters Open Interest (ROI),, opens new tab your essential new source for global financial commentary. ROI delivers thought-provoking, data-driven analysis of everything from swap rates to soybeans. Markets are moving faster than ever. ROI,, opens new tab can help you keep up. Follow ROI on LinkedIn,, opens new tab and X., opens new tab
The Independent
an hour ago
- The Independent
US and China to talk in Stockholm on trade with eye on Trump-Xi summit later this year
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Reuters
an hour ago
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CK Hutchison confirms period expired for talks with BlackRock consortium
HONG KONG, July 28 (Reuters) - Hong Kong's CK Hutchison ( opens new tab said on Monday that the period had expired for exclusive talks between the company and a BlackRock-led (BLK.N), opens new tab group for a contract to sell two port operations near the Panama Canal. The group, however, remains in discussions with members of the consortium, it said, with a view of inviting a major strategic investor from China to join as a member of the consortium.
