Northbound Capital Net Bought HK$13.4 Billion as Funds Concentrated into Tech Stocks
N.R. Finch
Southbound funds ("northbound water") net-bought HK$13.36 billion on July 15, pouring into internet and AI names while dumping the Tracker Fund and chip foundries — a clear sector rotation in a single session.
HK$13.4 billion in — where did the money go?
Shanghai-HK Stock Connect net-bought HK$4.50 billion; Shenzhen-HK Connect net-bought HK$8.87 billion — Shenzhen contributed roughly two-thirds.
Buying was tightly concentrated: Alibaba (09988) HK$3.09 bn, Tencent (00700) HK$1.81 bn, Meituan (03690) HK$1.29 bn. Three internet leaders alone accounted for nearly half of total net inflows.
This means → southbound capital was not spreading bets across Hong Kong stocks; it targeted internet blue chips with high conviction.
Why are funds choosing tech and AI right now?
Guosen Securities notes that Hong Kong-listed AI plays carry the strongest earnings visibility, internet leaders trade at low valuations, and several have significant room for re-rating.
OpenRouter data backs the thesis: weekly API calls to Chinese AI large models have ranked first globally for eleven straight weeks; Tencent's Hy3 and DeepSeek-V4-Flash swept the top six.
In plain terms = earnings support is real, usage data keeps validating, and valuations are still cheap — when all three hold, capital concentrates.
Zhipu and YOFC — two different AI buying logics?
Zhipu (02513) drew HK$1.54 bn in net buying. Founder Tang Jie published an internal letter titled *The Great Wave Is Here*, announcing a two-year "Touch High" plan aimed at AGI, and explicitly ruled out chasing near-term monetization.
YOFC (06869) drew HK$959 mn. The company issued a profit alert: first-half net profit of RMB 2.4–3.0 bn, up 711%–914% year-on-year.
This means → Zhipu is a bet on long-horizon technical breakthroughs; YOFC is a bet on AI infrastructure already converting to profit. Southbound capital is playing both time horizons at once.
Morgan Stanley added that YOFC's prior 50% pullback had fully priced in supply-side concerns, and the AI-driven fiber super-cycle remains intact.
GigaDevice bought — what does the CXMT IPO pricing signal?
GigaDevice (03986) saw HK$741 mn in net buying.
CXMT's IPO price was set at RMB 8.66 per share, implying a valuation of roughly RMB 580 bn — well below the market's prior expectation of a trillion-yuan range.
In plain terms = China's leading memory-chip company is listing at a discount, signaling the issuer's caution about current conditions and leaving room for the valuation to grow into.
Why were chip foundries and the Tracker Fund sold?
SMIC (00981) saw HK$653 mn in net selling; Hua Hong Semi (01347) saw HK$230 mn in net selling.
Morgan Stanley warned that mounting evidence points to limited pricing power for chip foundries. AI data-center tech stacks are being redesigned around cheaper in-house chips, and multiple hyperscalers are already designing their own silicon.
This means → the "AI dividend" for contract fabs may be diluted by customers going custom — stock prices that ran ahead on AI optimism may lack the earnings to sustain them.
Tracker Fund (02800) was the day's largest net sell at HK$1.33 bn. Guosen Securities attributes this to a firmer US dollar index tightening Hong Kong's relative liquidity, with broad-market ETFs taking the first hit.
Can this rotation last?
The day's fund flows showed a sharp structural rotation: internet and AI names absorbed concentrated buying while broad ETFs and chip foundries faced systematic selling.
Joinn Biologics (06127) surged over 30% intraday, yet southbound funds sold into the rally for a net HK$11.74 mn outflow. Its flagged first-half profit of RMB 600–900 mn (up 885%–1,377% YoY) stems mainly from fair-value gains on lab-monkey biological assets — not an improvement in its core pre-clinical business.
This reflects a northbound-water discipline: profits inflated by low-quality sources draw selling, not chasing. What funds are truly tracking is AI earnings visibility — and upcoming AI-model results will be the key variable that decides whether this rotation holds.
Content is for reference only, not financial advice.