21st Century Business Herald reporter Yi Yanjun reported from Guangzhou
Since the end of February, Hong Kong stocks have become more volatile, but major stock indexes have still significantly outperformed US stocks during the year. As of March 14, the Hang Seng Tech Index has risen by 31.62% since the beginning of the year, and the Hang Seng China Enterprises Index has risen by more than 21%. During the same period, the S&P 500 and Nasdaq fell by 4.13% and 8.06% respectively.
In the process of rising Hong Kong stocks, well-known public and private equity institutions frequently increased their positions in Hong Kong stocks.
The 21st Century Business Herald reporter noticed that in the past month, E Fund has twice increased its holdings in Zhaoyan New Drug (6127. HK）； Ruiyuan Fund has increased its position in Gushengtang (2273. HK）。
Since January this year, Ningquan Assets has successively increased its holdings in Xinte Energy (1799. HK), Vanke (2202. HK), Xinyi Energy (3868.HK) HK) and many other Hong Kong stocks.
Will there be further inflows of southbound funds and foreign capital in the future, and what is the follow-up momentum of the Hong Kong stock market?
1. Well-known public offerings have continuously increased their holdings of pharmaceutical stocks
According to the announcement disclosed by the Hong Kong Stock Exchange on March 12, on March 11, Ruiyuan Fund increased its holdings of 2,145,300 shares of Gushengtang at an average price of HK$35.4644 per share. After this increase, Ruiyuan Fund's shareholding in Gushengtang increased from 4.70% to 7.45%.
This is the third time that Ruiyuan Fund has increased its holdings in Gushengtang this year. Previously, on February 21 and February 26, Ruiyuan Fund successively increased its position by 753,400 shares and 410,000 shares of Gushengtang.
On March 5, E Fund increased its holdings of 162,800 shares of Zhaoyan New Drug at an average price of HK$13.8914 per share, with an increase of about HK$2,261,500. After this increase, E Fund held a total of 7,207,500 shares of Zhaoyan New Medicine, and the shareholding ratio increased to 6.06%.
On February 13 this year, E Fund also slightly increased its position in Zhaoyan New Medicine.
In addition, E Fund increased its holdings of 2.416 million shareholders of Yue Group on February 26, increasing its stake in Dongyue Group to 122 million shares, and its shareholding ratio increased to 7.06%.
Ningquan Asset Management, a well-known private equity fund, prefers power stocks and real estate stocks in Hong Kong stocks. On January 8, February 5 and February 13, Ningquan Asset increased its holdings of Xinte Energy three times, with a cumulative increase of about 2.164 million shares, and on February 11 and February 13, Ningquan Asset successively increased its holdings of Vanke Enterprise and Xinyi Energy. On February 14, Ningquan Assets increased its holdings in Datang New Energy and Country Garden Services.
2. During the year, the net purchase of southbound funds increased by more than 3 times year-on-year
Since the beginning of this year, benefiting from factors such as breakthroughs in AI large model technology and policy catalysis, Hong Kong stocks have ushered in a structural bull market. Moreover, Hong Kong stocks significantly outperformed US stocks.
According to Wind statistics, from January 1 to March 14, 2025, the Hang Seng Technology Index has risen by 31.62%, and the Hang Seng China Enterprises Index and Hang Seng Index have increased by 21.78% and 19.44% respectively; The Wind All A Index rose by 6.36%.
During the same period, the Nasdaq, S&P 500, and Dow Jones Industrial Average fell by 8.06%, 4.13%, and 2.48% respectively.
Wan Qiong, deputy director of investment of the index and quantitative investment department of Bosera Fund, pointed out that the current round of Hong Kong stocks is mainly driven by southbound funds, quantitative funds and passive allocation of ETFs, focusing on targets related to the concept of AI, such as the DeepSeek industry chain, while Hong Kong technology stocks have been repriced due to AI technology breakthroughs. Investors need to continue to pay attention to the actual effect of AI application implementation and enterprise cost reduction and efficiency increase in the first quarter of 2025 earnings season.
According to Wind statistics, on March 10, southbound funds bought about HK$29.6 billion on a net basis, the largest single-day since the launch of Stock Connect. In the long run, from January 1 to March 14, 2025, southbound funds have accumulated a net purchase of about HK $375.5 billion, an increase of more than three times compared with the same period in 2024.
At the same time, statistics from Founder Securities show that as of March 7 this year, the market value of Hong Kong Stock Connect holdings has risen to 4.5 trillion yuan, accounting for 12.7% of the total market value of Hong Kong stocks.
From the perspective of the flow of southbound funds, the research team of CITIC Securities analyzed that the inflow of southbound funds showed the characteristics of "dumbbell-shaped" allocation, with growth assets such as consumer Internet, technology leaders and innovative drugs that are scarce in A-shares at one end; On the other hand, they increase their holdings of high-dividend targets such as financials, telecommunications and energy, forming a risk hedging strategy.
3. Return of foreign capital
Lai Yeye, chief strategic analyst of SPDB International, pointed out that global funds have begun to rebalance, and the differentiation of funds in the allocation of A-shares and Hong Kong stocks has changed in the early stage. According to the EPFR, foreign capital returned to the Chinese mainland market in February, but the net outflow was out of the Hong Kong stock market, ending the previous seven consecutive months of net inflows. Then, in the last week of February, both Chinese mainland and Hong Kong recorded net inflows of foreign capital, and net inflows accelerated in the first week of March.
Lai Yeye predicts that there is still a large space for foreign capital to return in the future. "At present, there are no obvious signs of repatriation of active foreign capital, and its position in the Chinese stock market is still below the benchmark index. If market sentiment further improves, policy stimulus fundamentals continue to recover, and the money-making effect becomes more obvious, it is expected to drive active foreign investors to upgrade the allocation of Chinese assets from underweight to standard. ”
From the perspective of capital analysis, Luo Jiaming, fund manager of China Europe Fund, pointed out that the main force of the current round of rise in Hong Kong stocks is driven by southbound funds (domestic capital) and foreign transactional funds, but there are certain differences in the degree of participation, the nature of funds and the direction of allocation between the two.
According to his analysis, the inflow of foreign capital in the early stage was dominated by short-term flexible trading funds (such as hedge funds), mainly targeting technology stocks, which resonated with domestic capital, so the market rose very rapidly. Since mid-February, long-term stable foreign funds have begun to see significant inflows, mainly index blue chips, and the market has spread from technology to consumption, insurance and other sectors, but compared with the inflow of long-term foreign capital in the past three years, this round of reflow is only a phased repair.
4. What factors are needed to support the subsequent rise?
According to Hu Mohan, manager of Mingze Investment Fund, in the short term, after the market rises rapidly, there may be some profit-taking pressure, and sentiment may also fall. However, from a long-term perspective, with the continued recovery of China's economy and the increasing attractiveness of the Hong Kong stock market, southbound capital inflows are expected to continue.
In Cui Chenlong's view, considering that the overall valuation is close to a reasonable level, the future rise may require specific industry companies or macroeconomic fundamentals to continue to improve and deliver performance to maintain the overall upward trend of the market. However, many of them have experienced a pullback in the past many years, and the absolute position is still relatively low, and there may be a need to make up for the rise.
He pointed out that based on the current rapid development of the technology industry, if it can be maintained, the upward trend of economic fundamentals will be more obvious, and the Hong Kong stock market will have a further upward trend.
In addition, Bao Jingang, fund manager and senior researcher of Rongzhi Investment, said that the current Hong Kong stock market sentiment is close to the high point in May 2024, and the technical indicators are close to overbought. However, the high market sentiment is more based on optimistic expectations of future economic recovery and favorable policies.
Bao Jingang believes that the valuation of Hong Kong stocks still has a significant discount advantage over A-shares, and the attractiveness of high-dividend assets is stronger. The continuous promotion of domestic economic growth policies and the recovery of macroeconomic data will provide fundamental support for the Hong Kong stock market. As the domestic market stabilizes and the cycle recovers, corporate earnings are expected to pick up at an accelerated pace.
"Next, we will focus on exploring investment opportunities related to technology and Internet stocks and new consumption in the Hong Kong stock market." Bao Jingang said.
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