Southbound Funds Net Bought HK$11 Billion, Loading Up on Tracker Fund and Tech Stocks
Miles Bennett
Southbound Connect channels posted a combined HK$11.03 billion net buy on August 3, heavily concentrated in the Tracker Fund and internet giants, while semiconductor names saw coordinated selling — mainland money is rotating sectors in real time.
Where did the HK$11 billion go?
Shanghai-linked Stock Connect bought a net HK$6.43 billion; the Shenzhen link added HK$4.60 billion.
The single largest target was Tracker Fund of Hong Kong (02800), absorbing HK$4.75 billion alone. This means → nearly half of all northbound capital went into one broad-market ETF, not individual stocks.
In plain terms = mainland investors are saying "we're bullish on Hong Kong's direction as a whole" — buy the index first, pick names later.
Why are big tech names drawing so much capital?
Alibaba (09988) drew a net HK$4.17 billion. The company launched Qwen 3.8-Max on the same day — 2.4 trillion total parameters, 95 billion active, the largest Qwen model ever and its first Max-tier open-source release.
Benchmarks show its coding and general-agent capabilities on par with Anthropic's Fable 5, exceeding it on some metrics, with autonomous execution in chip design and quant-research tasks. This means → the market read the release as a signal that Alibaba's AI capability has entered the global top tier.
Tencent (00700) drew a net HK$2.43 billion. Huayuan Securities sees the Hunyuan model series as proof that Tencent is not materially behind China's leading AI players; WorkBuddy and WeChat AI Agent are validating both enterprise and consumer product paths.
Xiaomi and Meituan — what story is the money buying?
Xiaomi (01810) drew a net HK$293 million. The company unveiled Pengcheng, its second EV product line, complementing SU7 and YU7; both models are expected to launch in September this year.
CICC expects combined deliveries across SU7, YU7, and Pengcheng to drive sustained auto-sales growth and margin recovery.
Meituan (03690) drew a net HK$580 million. CSOP Hang Seng Tech (03033) drew a net HK$317 million.
Why are semiconductor stocks being dumped?
SMIC (00981) saw net selling of HK$1.06 billion; Hua Hong Semi (01347) saw HK$402 million in net outflows — the two heaviest sells of the day.
BOCI ranks the sector TSMC > Hua Hong > SMIC. Hua Hong earns a higher multiple on greater exposure to AI power-analog, a better profit-expansion trajectory, and potential value from a Huali Micro asset injection; SMIC was downgraded to "Hold" on softer growth and a balance sheet weighed down by expansion and M&A.
GigaDevice (03986) lost HK$173 million; Kingboard Laminates (01888) lost HK$310 million. This reflects a resonance between northbound selling and a broader memory-stock rout tracking South Korea's sharp decline.
What to watch next?
BOCOM International notes the Hang Seng Index and Hang Seng Tech Index bottomed in July after a June correction, supported by improving liquidity, valuation repair, and earnings recovery — further upside is possible.
The recommended allocation is a barbell structure: high-beta tech-growth assets on one end, reflation beneficiaries and steady-cash-flow names on the other.
Whether semiconductor stocks can find a floor depends on the pace of stabilization in South Korea — if Korean memory names keep falling, northbound selling pressure is unlikely to ease in the near term.
Content is for reference only, not financial advice.