Southbound Funds Net Buy Hong Kong Stocks for Two Consecutive Months Amid AI Turmoil
Taylor Wilson
Southbound flows hit HK$62.3 billion in July, more than double June's total; the STAR 50 crashed 26% while the Hang Seng rallied 13% — mainland capital is rotating out of expensive AI plays into cheaper Hong Kong names.
How much money moved south?
Southbound flows via Stock Connect totalled a net HK$62.3 billion (≈US$8 billion) in July, up from HK$27.1 billion in June.
The top three buys: Z.ai, Alibaba, and NetEase — all internet platforms.
This means → mainland investors are not fleeing risk; they are switching markets to keep buying tech.
Why are funds leaving A-shares?
The global AI trade unwind hammered mainland tech: the STAR 50 index fell 26% in July, its worst single-month drop on record.
Over the same period the Hang Seng rose 13%, outperforming most major global benchmarks.
In plain terms = A-share tech stocks got hit by the AI sell-off; Hong Kong, having sat out most of the AI frenzy, became the safer ground.
What makes Hong Kong the destination?
BOCOM International analyst Melody Lai noted that risk appetite has fallen, but global capital has not left equities — it is rebalancing across markets and sectors.
The core draw: valuation. Even after the July rally the Hang Seng trades at just 12.2× earnings, far below the S&P 500's 25.8× and the CSI 300's 14.2×.
This means → Hong Kong's low exposure to the AI boom turned from a weakness into a buffer during the sell-off.
Can this pace last?
Southbound flows have now been net positive for two consecutive months, and accelerating — July's total was 2.3× June's.
Whether the trend holds depends on one variable: what happens next in the global AI trade.
In plain terms = if AI stocks keep falling, the incentive to rotate stays; if AI rebounds, this flow could fade.
Content is for reference only, not financial advice.