Alibaba, HKEX attract Chinese investors as inflows to Hong Kong stocks surge

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Net inflows blow past last year’s total in a buying rush ahead of the ‘golden week’ holiday

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On September 25, 2024, tourists walk along Park Lane Shopper’s Boulevard in Tsim Sha Tsui, which is festooned with flags to celebrate the 75th anniversary of the founding of the People’s Republic of China. Photo: Jelly Tse

Jiaxing Li

Published: 6:00pm, 30 Sep 2024Updated: 6:27pm, 30 Sep 2024

Traders in mainland China rushed to snap up Hong Kong stocks before the "golden week" holiday begins, as Beijing’s surprise policy bazooka ignited a buying spree.

Southbound investors bought HK$12.1 billion (US$1.6 billion) worth of local shares on Monday, the biggest single-day total in more than six months, according to stock exchange data. That helped propel overall turnover in Hong Kong to HK$505.8 billion, a record high.

Alibaba Group Holding, Hong Kong Exchanges and Clearing, and Wuxi Biologics were the most popular local shares bought through the Stock Connect scheme amid the frenzy, with a total net inflow of US$1.9 billion last week, according to data from Goldman Sachs. The Tracker Fund, which mirrors the Hang Seng Index, and an ETF (exchange-traded fund) tracking the Hong Kong-listed Chinese stocks are the best-selling ETFs; their combined inflow topped US$110 million.

So far this year, mainland investors have bought US$64 billion worth of Hong Kong stocks, surpassing last year’s total of US$42 billion and heading towards the biggest year since a US$87 billion buying spree in 2020, according to data from Goldman Sachs.

“[We] see more upside coming from a lower interest rate, weaker US dollar, stronger than expected policy stimuli and improved earnings revisions,” said Angus Chan, head of Hong Kong strategy at UBS Investment Bank.

The bank now expects the Hang Seng Index to end the year at 22,100 and the MSCI Hong Kong Index to hit 9,600, 7 per cent and 1 per cent higher than the bank’s previous targets, respectively, according to a report to clients. Stocks that offer high yields and companies in the travel industry that are sensitive to changes in the Chinese economy are some of their favourite picks, they added.