Southbound Net Buying Reaches HK$4.5B: PCB Stocks Accumulated While Chip Stocks Sold Off
Taylor Wilson
Northbound capital posted HK$4.54 billion in net purchases on July 3, but AI hardware names split sharply — PCB material stocks absorbed over HK$1 billion while chip foundries were sold for nearly HK$1.8 billion, a collision between a pricing upcycle and overcapacity fears.
Where did northbound money go heaviest?
Kingboard Laminates (01888) drew HK$903 million in net buying; Kingboard Holdings (00148) added HK$94.6 million — together over HK$1 billion, topping the northbound buy list.
This means → the heaviest bets landed on upstream PCB materials — the raw inputs for printed circuit boards — not on chips themselves.
Context: electronic cloth, a key PCB feedstock, saw monthly price hikes through H1 2025. In July a leading producer announced another round; brokers expect the cycle to run through year-end. Kingboard's Shaoguan plant fired up roughly three months ahead of schedule, racing to match the pricing cycle.
What happened in consumer tech and internet blue chips?
Xiaomi (01810) drew HK$863 million in net buying. Citi sees a potential rebound in August, driven by the upcoming YU9 vehicle launch; if global Chinese memory makers announce further capex — signaling a peak in memory prices — that would be a positive catalyst over the next 12 months. Xiaomi shipped over 30,000 EVs in June.
Tencent (00700) drew HK$298 million in net buying. Guosheng Securities argues that integrating AI agents — tools that let AI carry out tasks for users automatically — into WeChat could turn it into a "super-portal" for the AI era, accelerating Tencent's position in the AI race.
Why were chip foundries sold so aggressively?
Hua Hong Semiconductor (01347) saw HK$996 million in net selling; SMIC (00981) saw HK$803 million — together nearly HK$1.8 billion, almost fully offsetting the PCB inflows.
Two sell-side narratives drove the dump: ① Meta plans to rent out spare AI compute capacity, stoking fears of overcapacity and a pullback in hyperscaler capex; ② Anthropic is in talks with Samsung to co-develop custom AI chips, potentially using Samsung's 2 nm process.
In plain terms = AI giants may stop buying compute at a frantic pace on one side, and start building their own chips on the other — a pincer that weakens foundries' pricing power from both ends.
Which other names were sold?
YOFC (06869) saw HK$290 million in net selling. Nomura warns that Hengtong Optic-Electric, Far East and other firms have launched fiber-preform expansion plans; if newcomers deliver high-end products successfully, incumbents like YOFC face margin pressure.
Alibaba (09988) saw HK$291 million in net selling. Yicai Global reported that Alibaba has placed Claude Code on its high-risk software list after reports of a backdoor vulnerability, banning all Anthropic products for internal use from July 10.
What does this divergence reveal?
Both sit within the AI hardware chain, yet PCB materials have pricing certainty (monthly hikes, fresh capacity just online) while chip foundries face two demand-side uncertainties (overcapacity risk + hyperscaler in-house chip efforts).
This reflects northbound capital's current stock-picking logic: certainty premium > sector label — it is not enough to carry an "AI" tag; the market is asking whose earnings cycle is harder to dent.
Whether this split persists hinges on how hyperscaler capex expectations evolve: if Meta's and Anthropic's moves prove one-offs rather than a trend, selling pressure on foundry stocks may ease.
Content is for reference only, not financial advice.