Southbound Capital Net Sold HK$4.2 Billion, Added Nearly HK$500 Million in Zhipu
Claire Weston
Northbound capital net-sold HK$4.23 bn on July 23, with Tracker Fund leading outflows at over HK$2.5 bn — yet Meituan and Zhipu drew heavy net buying. AI software was chased; AI hardware was dumped. The money is rotating within the same value chain.
How much was sold, and where did the money go?
Shanghai Connect net-sold HK$1.89 bn; Shenzhen Connect net-sold HK$2.34 bn — a combined HK$4.23 bn outflow.
Tracker Fund (02800) saw HK$2.52 bn in net selling, the single largest outflow of the day. Huatai Securities noted that hedging-related unwinds may be roughly halfway done, with short-selling capital beginning to rebuild.
This means → the day's dominant move was trimming index-level exposure, not stock-by-stock disposal.
Who attracted buying against the tide?
Meituan (03690) led net inflows at HK$641 mn. Meituan recently open-sourced LongCat-2.0, a trillion-parameter large model (1.6T parameters, 30T+ tokens of pre-training data, native 1M-context support). Citi said the move could reinforce Meituan's lead in local-services.
Zhipu (02513) drew HK$494 mn in net buying. CICC noted that Zhipu's GLM-5.2 is the first Chinese open-source model to reach the Opus-4.8 tier, and flagged upside across model capability, compute expansion, and commercialisation.
Montage Technology (06809) attracted HK$104 mn. Filings show Montage and AMEC jointly established a RMB 2.1 bn venture fund targeting pre-IPO companies.
Why were AI hardware names sold off together?
SMIC (00981) saw HK$892 mn in net selling; YOFC (06869) HK$600 mn; Hua Hong (01347) HK$420 mn; Kingboard Laminates (01888) HK$351 mn; GigaDevice (03986) HK$84 mn — all AI hardware or upstream suppliers.
In plain terms = the trigger was Alphabet's earnings: Q2 capex doubled year-on-year to US$44.9 bn, free cash flow fell to negative US$5.9 bn (the first negative reading in decades), and full-year capex guidance was raised to US$195–205 bn.
This means → the market is asking: AI hardware spending is already this aggressive — how long can it last? That uncertainty fed straight into Hong Kong-listed hardware supply chains.
Why were Tencent and Alibaba cut at the same time?
Tencent (00700) saw HK$1.54 bn in net selling; Alibaba (09988) saw HK$1.10 bn.
CLSA noted the sell-off was triggered by reports that US Treasury Secretary Bessent said Washington would closely scrutinise open-source AI models from China over IP-theft concerns.
CLSA added that Tencent's and Alibaba's flagship models have moved well beyond model distillation (a low-level technique that copies another model's outputs). Both remain core holdings for most global funds, but heavy recent inflows into memory and hardware names have diverted capital away from the two platform stocks.
What is the day's money flow actually saying?
Buying side: Meituan, Zhipu — AI applications and model capability. Selling side: SMIC, Hua Hong, YOFC — AI hardware and manufacturing. Capital is rotating directionally between the upstream and downstream of the same value chain.
This reflects northbound investors' current read: "using AI" looks more certain than "building AI." Model and application layers are starting to deliver commercial value, while the hardware layer faces a global question mark over capex sustainability.
Huatai's forward view: the fund-flow-driven rebound may persist on a monthly horizon, but a lasting reversal hinges on how well fundamentals hold up once earnings season concludes.
Content is for reference only, not financial advice.