Southbound Net Buying Hits HK$20.5B: Tencent Attracts HK$2.5B Inflow as AI Hardware Faces Sell-Off
Miles Bennett
Northbound capital net-bought HK$20.5 billion on July 6, splitting sharply: internet giants like Tencent drew heavy inflows while AI hardware names — optical fiber, PCB — were sold off after Nvidia's Kyber rack delay.
Where did the HK$20.5 billion go?
Shanghai Connect net-bought HK$12.55 bn; Shenzhen Connect added HK$7.98 bn, totalling HK$20.53 bn.
Tracker Fund (02800) alone absorbed HK$6.87 bn; Hang Seng China Enterprises ETF (02828) took HK$964 mn. Broad-based ETFs were the day's biggest reservoir.
This means → most northbound money was not stock-picking but index-level allocation — funds see value in HK's bottom zone, yet aren't confident enough to go name-by-name.
Why did Tencent attract HK$2.5 billion in a single day?
Tencent (00700) led individual-stock inflows at HK$2.49 bn.
Two catalysts: ① Hunyuan Hy3 launched, matching flagship models 2–5× its parameter size at a lower price; ② JPMorgan noted the WeChat AI Agent entered beta testing in June — milestones are now visible, no longer a promise.
In plain terms = the model caught up on performance, the price came down, and the product has a timeline — all three at once, so capital stepped in.
Who else on the AI software chain got bought?
Zhipu (02513) drew HK$681 mn. Huachuang Securities said GLM-5.2's open-source launch confirms Zhipu's lead among domestic LLMs; AI Coding is shifting from "assisted generation" to "understanding projects, breaking down tasks, debugging, and delivering."
Alibaba (09988) net-bought HK$754 mn; Hua Hong Semi (01347) HK$282 mn; GigaDevice (03986) HK$105 mn.
This reflects a clear capital logic: add to software-application names, trim hardware-manufacturing names — opposite bets on the same AI supply chain.
Why were AI hardware stocks dumped?
YOFC (06869) saw HK$1.09 bn in net selling; Kingboard Laminates (01888) HK$1.07 bn; Kingboard Holdings (00148) HK$854 mn; SMIC (00981) HK$818 mn — four names totalling over HK$3.8 bn in outflows.
The trigger: semiconductor research firm SemiAnalysis disclosed that Nvidia's Kyber NVL144 rack architecture — the next-generation AI server platform — faces a delay of over 12 months, pushed to 2028, because "mid-board PCB manufacturing still faces major challenges."
This means → the hardware bottleneck in AI compute expansion is worse than the market expected. Optical fiber and PCB sit closest to that bottleneck, so they took the hit first.
What are brokerages saying about the outlook?
Guotai Junan International sees the shock being gradually digested; with HK interim results potentially troughing, the market may return to fundamentals-driven valuation.
Huatai Securities is more cautious: no clear fundamental reversal yet, but Fed tightening expectations have cooled after payrolls data, USD momentum has eased, and extreme sentiment is at a low — a technical repair is underway. Structural plays in HK are this year's allocation focus.
In plain terms = neither house calls a confirmed bottom, but both agree "the panic phase is over — time to pick structural opportunities."
What to watch next?
Whether the Nvidia Kyber delay keeps weighing on AI hardware is the biggest near-term variable.
Whether northbound inflows into internet names persist depends on product-launch cadence — particularly Tencent's WeChat AI Agent milestones.
This means → the software-vs-hardware capital split may not be a lasting trend. The key question is whether Kyber is "delayed" or "derailed" — if it's just a timeline shift, the hardware pullback could turn out to be an opportunity.
Content is for reference only, not financial advice.