Mainland Investors Buy Hong Kong In Size
6 Min. Read Time
Key News
Asian equities were lower, as South Korea underperformed, while Pakistan was closed for Kashmir Day, which is a national holiday celebrated to “express support for the people of Jammu and Kashmir and their demand for self‑determination,” according to Perplexity.
Hong Kong and Mainland China opened lower but grinded higher as the former managed to close in the green, led by internet stocks. Meanwhile, non-ferrous metals stocks were led lower by Zijin Mining, which fell -4.76% in Hong Kong and -4.37% in Mainland China. Silver futures in Shanghai fell -12%, while gold was off nearly -2%.
There was some chatter that the bank reserve requirement ratio will be cut in Q2, though Mainland investors said “No mas!” to Hong Kong’s downdraft, buying a very large $3.20 billion worth of Hong Kong stocks via Southbound Stock Connect following yesterday’s net buy of $1.71 billion. The year-to-date (YTD) total is now $14.13 billion of net buying. Tencent gained +0.09% on VERY HIGH volume that was 3X the 1-year average (79 million shares traded today versus the 1 year average 23 million) had $713 million worth of net buying from Mainland investors. The 149 Mainland-listed ETFs that provide exposure to Hong Kong stocks had $703 million worth of net inflow today, which brings the 1-week total to $1.82 billion and the YTD total to $5.84 billion, as Mainland investors are buying on low prices.
Baidu +2.7% after announcing a $5 billion stock buyback and its first ever dividend. Baidu is taking the corporate governance and shareholder-friendly baton from Alibaba, which gained +0.06% and Tencent’s generous buyback, spin offs and dividends. Meituan gained +1.79% after announcing the purchase of e-commerce grocery delivery company Dingdong (DDL US). The acquisition, which is the first since pre-2021 internet regulation, could be interpreted as a signal that regulators are taking a positive view of the industry. It is an interesting rebuttal to the recent downdraft due to the rumor of e-commerce value-added tax (VAT) being raised.
YUM China’s Hong Kong share class gained +11.32% versus only +4.82% for the US ADR yesterday after yesterday’s pre-US market open Q4 financial results. So, given the same piece of information Hong Kong investors were 2X more bullish. Interesting.
NIO gained +2.61% before announcing that Q4 2025 will be its first profitable quarter, which should make our friend Marcel happy. Mainland China also grinded higher off intra-day lows but couldn’t get into positive territory as communication equipment, along with tech hardware, chips, and non ferrous metals were all weak.
At a conference held by the China Photovoltaic Industry Association, it was announced total 2026 solar/photovoltaic capacity to be added will be between 180GW to 240GW. To put that in perspective the US’ total solar capacity is ~200GW. The Wang Shijiang of the Ministry of Industry & Information Technology (MIIT) spoke at the event, noting the solar industry still faces overcapacity. He reiterated the January 28th MIIT message to the solar industry executives that “anti-domestic competition” is still problematic. These comments, along with the 300GW estimate below expectations, explain the weak performance of Mainland-listed solar stocks such as Sungrow (-4.12%), Longi (-5.595%), and likely weighed on CATL (-0.57%). An EU wind turbine trade probe also likely didn’t help. Polycrystalline silicon futures fell -1.52% and silicon futures -2.77% on the news.
The Foreign Ministry didn’t confirm nor deny that President Xi will visit Washington DC by year end. Yesterday’s phone call between Trump and Xi makes today’s Wall Street Journal article look silly, in my opinion.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | 0.1% |
| Hang Seng Tech | HSTECH Index | 0.7% |
| Hong Kong Turnover | HKTurn Index | 10.4% |
| Hong Kong Short Sale Turnover | HKSST Index | 46.5% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 20.6% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 3,189.97 |
| China (Shanghai) | SHCOMP Index | -0.6% |
| China (Shenzhen) | SZCOMP Index | -1.3% |
| China (STAR Board) | Star50 Index | -1.4% |
| Mainland Turnover | .chturn Index | -12.4% |
| Japan | NKY Index | -0.9% |
| India | SENSEX Index | -0.6% |
| Indonesia | JCI Index | -0.5% |
| Malaysia | FBMKLCI Index | -0.7% |
| Pakistan | KSE100 Index | 0.5% |
| Philippines | PCOMP Index | 0.1% |
| South Korea | KOSPI Index | -3.9% |
| Taiwan | TWSE Index | -1.5% |
| Thailand | SET Index | 0% |
| Singapore | STI Index | 0.2% |
| Australia | AS51 Index | -0.4% |
| Vietnam | VNINDEX Index | -0.5% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 120 | 117 |
| Advancing Stocks | 297 | 1559 |
| Declining Stocks | 190 | 3458 |
| Outperforming Factors | Growth, Low Volatility, Dividend Yield | Low Volatility, Dividend Yield, Value |
| Underperforming Factors | Large Cap, Momentum, EPS Revision | Momentum, Liquidity, EPS Revision |
| Top Sectors | Staples, Tech, Discretionary | Staples, Communication, Financials |
| Bottom Sectors | Materials, Energy, Industrials | Materials, Energy, Tech |
| Top Subsectors | Household Products, Consumer Goods & Services | Chemicals, Forest, Tourism |
| Bottom Subsectors | Metals, Chemicals, Machinery | Metals, Energy Equipment, Power Production |
| Southbound Connect Buys | Tencent, HK Tracker ETF (Very Large), Alibaba, HS China Enterprise ETF (Large), HS Tech ETF, Pop Mart, Xiaomi (Moderate) | |
| Southbound Connect Sells | SMIC (Small) |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 165 | 0.27 |
| Communication Services | 11 | 0.3 |
| Consumer Discretionary | 28 | 0.9 |
| Consumer Staples | 13 | 1.94 |
| Energy | 6 | -1.23 |
| Financials | 25 | 0.12 |
| Health Care | 16 | 0.19 |
| Industrials | 22 | -0.23 |
| Information Technology | 12 | 1.88 |
| Materials | 14 | -4.56 |
| Real Estate | 7 | -0.03 |
| Utilities | 11 | 0.51 |
| Mainland China Listed | 386 | -0.78 |
| Communication Services | 8 | 0.79 |
| Consumer Discretionary | 26 | 0.47 |
| Consumer Staples | 19 | 1.31 |
| Energy | 12 | -2.15 |
| Financials | 64 | 0.78 |
| Health Care | 31 | 0.72 |
| Industrials | 58 | -1.31 |
| Information Technology | 95 | -1.73 |
| Materials | 52 | -3.61 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | 0.1 |
| Alibaba HK | 9988 HK Equity | 0.1 |
| JD.com HK | 9618 HK Equity | 0.8 |
| NetEase HK | 9999 HK Equity | 0.4 |
| Yum China HK | 9987 HK Equity | 11.4 |
| Baozun HK | 9991 HK Equity | 3.7 |
| Baidu HK | 9888 HK Equity | 2.7 |
| Autohome HK | 2518 HK Equity | 3.1 |
| Bilibili HK | 9626 HK Equity | -0.3 |
| Trip.com HK | 9961 HK Equity | -0.5 |
| EDU HK | 9901 HK Equity | -3.1 |
| Xpeng HK | 9868 HK Equity | 1.1 |
| Weibo HK | 9898 HK Equity | 0 |
| Li Auto HK | 2015 HK Equity | 1.9 |
| Nio Auto HK | 9866 HK Equity | 2.7 |
| Zhihu HK | 2390 HK Equity | 0.4 |
| KE HK | 2423 HK Equity | -0.2 |
| Tencent Music Entertainment HK | 1698 HK Equity | -1.7 |
| Meituan HK | 3690 HK Equity | 1.8 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| GCL TECHNOLOGY HOLDINGS LTD | 1.9 |
| SENSETIME GROUP INC-CLASS B | -0.4 |
| COUNTRY GARDEN HOLDINGS CO | 0 |
| SUNAC CHINA HOLDINGS LTD | -0.8 |
| SEAZEN GROUP LTD | -13.2 |
| CHINA CONSTRUCTION BANK-H | 0.5 |
| HORIZON ROBOTICS INC | 3.6 |
| XIAOMI CORP-CLASS B | 2.8 |
| DAMAI ENTERTAINMENT HOLDINGS | 0 |
| IND & COMM BK OF CHINA-H | 0.5 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | 0.4 |
| KWEICHOW MOUTAI CO LTD-A | 2 |
| EOPTOLINK TECHNOLOGY INC L-A | -4.1 |
| ZIJIN MINING GROUP CO LTD-A | -4.4 |
| ADDSINO CO LTD -A | -1.5 |
| BLUEFOCUS INTELLIGENT COMM-A | -5.8 |
| WANGSU SCIENCE & TECHNOLOG-A | 7.5 |
| SUZHOU TFC OPTICAL COMMUNI-A | -5.5 |
| CONTEMPORARY AMPEREX TECHN-A | -0.6 |
| LEO GROUP CO LTD-A | -4.8 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.94 versus 6.94 yesterday
- CNY per EUR 8.19 versus 8.19 yesterday
- Yield on 10-Year Government Bond 1.82% versus 1.82% yesterday
- Yield on 10-Year China Development Bank Bond 1.96% versus 1.97% yesterday
- Copper Price -2.31%
- Steel Price -0.42%
