Mainland Investors Buy Hong Kong Stocks On Weakness
6 Min. Read Time
Key News
Asian equities were lower overnight on President Trump’s threat to escalate Iranian military efforts, as higher oil prices and central banks potentially pivoting to higher, not lower, interest rates in 2026 raised stagflation and inflation shock fears. Pakistan was closed for Pakistan Day, celebrating the country’s birth in 1956, and Indonesia was closed for the "Idul Fitri" Festival that marks the end of Ramadan.
This morning’s Trump claim of Iranian talks sent futures higher. Both Hong Kong and Mainland China sold off on high volumes, as the Hang Seng Index closed below the 25,000 level, while Mainland China had only 288 advancing stocks versus 4,866 declining stocks.
We often point to insurance giant AIA, which fell -7.79% overnight, as a proxy for foreign professional sentiment. The stock is not part of the MSCI China Index, which is part of the MSCI Emerging Markets Index. Rather, it is part of the MSCI Hong Kong Index, which is considered a developed market benchmark. The sharp drop in the insurer's stock indicates a rush by foreign professional investors to exit positions regardless of price.
Premier Li’s keynote speech at the China Development Forum in Beijing included a commitment to China’s continued opening up and willingness to address trade concerns. This year’s event is titled "China During the 15th Five-Year Plan Period: High-Quality Development & tThe Joint Creation of New Opportunities". Interestingly, Apple’s Tim Cook is the international co-chair for the Forum this year. China's central bank governor Governor Pan also spoke at the Forum, reiterating “loose monetary policy” and willingness to lower interest rates. Vice Premier He Lifeng spoke yesterday to at the US China Business Council
The Beijing city government called in a group of E-Commerce heavyweights that included Alibaba, Meituan, and JD.com, to discuss the extreme competition thatr erupted last year in the instant commerce, i.e. the delivery of goods, both food and non-food, in thirty minutes or less to urban consumers. I view this as a positive signal for the companies' bottom lines as consumer subsidies were weighing heavily on profitability, which was reflected in Alibaba's earnings last week.
I stumbled upon the March release of China' "Emerging Industries" purchasing managers' index (PMI), which is produced by the National Development Reform Commission (NDRC). The PMI surveys 280 companies in seven industries including green technology, new generation information technology, biotech, high-end manufacturing, new materials, electric vehicles (EVs), and hybrid vehicles. The special PMI jumped 13 points month-over-month in Febuary to 57, indicating strong expansion.
Hong Kong’s elevated volumes overnight were driven by the fourth-largest net buy day ever from Mainland investors via Southbound Stock Connect. Mainland investors poured a net $3.8 billion into Hong Kong-listed stocks and ETFs.
Tencent was the most heavily traded stock by value in Hong Kong overnight, as it fell -1.89%. Management is out speaking to analysts and investors about their results last week. Alibaba fell -3.23%, though the company is expected to announce a new AI chip tomorrow at the 2026 Xuanche RISC-V Ecosystem Conference in Shanghai.
BYD gained +4.46% on expected high demand for EVs due to high gas prices in China, though its Hong Kong-listed shares fell -1.35% after giving up gains.
Robotics company Kailaisi’s Hong Kong IPO is oversubscribed by 2,000 times. PetroChina gained +0.82% and CNOOC +0.45%, though it was an ugly tape otherwise. The Mainland-listed ETFs favored by China's "National Team", i.e. investmet firms associated with sovereign wealth, had above average volumes, as fund flows have turned positive over the last week. It is feasible that January’s mass exodus of National Team funds from these ETFs could be reversing.
PDD Holdings and Kuiashou report Wednesday after the Hong Kong close. Meituan reports Thursday after the Hong Kong close. Meanwhile, it is a relativelty quiet week for economic data.
Last Night's Performance
| Country / Index | Ticker | 1-Day Change |
|---|---|---|
| China (Hong Kong) | HSI Index | -3.5% |
| Hang Seng Tech | HSTECH Index | -3.3% |
| Hong Kong Turnover | HKTurn Index | 7.6% |
| Hong Kong Short Sale Turnover | HKSST Index | 39.2% |
| Short Turnover as a % of Hong Kong Turnover | N/A | 22.6% |
| Southbound Stock Connect Net Buy/Sell (US $ Millions) | N/A | 3,796.67 |
| China (Shanghai) | SHCOMP Index | -3.6% |
| China (Shenzhen) | SZCOMP Index | -4.2% |
| China (STAR Board) | Star50 Index | -4.3% |
| Mainland Turnover | .chturn Index | 6.4% |
| Japan | NKY Index | -3.5% |
| India | SENSEX Index | -2.5% |
| Indonesia | JCI Index | 1.2% |
| Malaysia | FBMKLCI Index | -0.5% |
| Pakistan | KSE100 Index | -1% |
| Philippines | PCOMP Index | -2% |
| South Korea | KOSPI Index | -6.5% |
| Taiwan | TWSE Index | -2.4% |
| Thailand | SET Index | -2.5% |
| Singapore | STI Index | -2.2% |
| Australia | AS51 Index | -0.7% |
| Vietnam | VNINDEX Index | -3.4% |
| Indicator | Hong Kong | Mainland China |
|---|---|---|
| Today's Volume % of 1-Year Average | 143 | 125 |
| Advancing Stocks | 28 | 288 |
| Declining Stocks | 496 | 4866 |
| Outperforming Factors | Value | Value |
| Underperforming Factors | Momentum, EPS Revision, Liquidity | Quality, Liquidity, Growth |
| Top Sectors | Energy, Utilities, Communication Services | Energy, Consumer Discretionary, Utilities |
| Bottom Sectors | Materials, Financials, Healthcare | Tech, Communication, Real Estate |
| Top Subsectors | Coal, Petroleum & Petrochemicals, Autos | Coal, Oil & Gas |
| Bottom Subsectors | Semiconductors, Non Ferrous Metals, Construction Materials | Catering/Tourism, Education, Daily Chemical |
| Southbound Connect Buys | HK Tracker ETF (Massive), HS Tech ETF, HS China Enterprise ETF (Very Large), Xiaomi (Large), Tencent (Moderate), CNOOC (Small) | N/A |
| Southbound Connect Sells | SMIC (Moderate), Alibaba (Small) | N/A |
| MSCI China All Shares Index | # of Stocks | Average 1-Day Change (%) |
|---|---|---|
| Hong Kong Listed | 164 | -3.25 |
| Communication Services | 11 | -2.35 |
| Consumer Discretionary | 28 | -2.86 |
| Consumer Staples | 12 | -3.46 |
| Energy | 6 | -1.38 |
| Financials | 25 | -4.27 |
| Health Care | 16 | -4.21 |
| Industrials | 19 | -3.54 |
| Information Technology | 15 | -4 |
| Materials | 14 | -5.41 |
| Real Estate | 1 | -4.07 |
| Utilities | 6 | -2.17 |
| Mainland China Listed | 11 | -4.6 |
| Communication Services | 11 | -1.57 |
| Consumer Discretionary | 26 | -3.34 |
| Consumer Staples | 18 | 0.16 |
| Energy | 11 | -3.59 |
| Financials | 64 | -3.94 |
| Health Care | 29 | -3.17 |
| Industrials | 60 | -4.75 |
| Information Technology | 113 | -3.42 |
| Materials | 58 | -4.42 |
| US & Hong Kong Dually Listed | Ticker | 1-Day Change (%) |
|---|---|---|
| Tencent HK | 700 HK Equity | -1.9 |
| Alibaba HK | 9988 HK Equity | -3.2 |
| JD.com HK | 9618 HK Equity | -3.2 |
| NetEase HK | 9999 HK Equity | -3.6 |
| Yum China HK | 9987 HK Equity | -3.8 |
| Baozun HK | 9991 HK Equity | -0.2 |
| Baidu HK | 9888 HK Equity | -5 |
| Autohome HK | 2518 HK Equity | -3.6 |
| Bilibili HK | 9626 HK Equity | -6 |
| Trip.com HK | 9961 HK Equity | -3.7 |
| EDU HK | 9901 HK Equity | -3.9 |
| Xpeng HK | 9868 HK Equity | 0 |
| Weibo HK | 9898 HK Equity | -2.4 |
| Li Auto HK | 2015 HK Equity | -3 |
| Nio Auto HK | 9866 HK Equity | -5.2 |
| Zhihu HK | 2390 HK Equity | -1.1 |
| KE HK | 2423 HK Equity | -5.3 |
| Tencent Music Entertainment HK | 1698 HK Equity | -3.2 |
| Meituan HK | 3690 HK Equity | -3.3 |
| Hong Kong's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| TENCENT HOLDINGS LTD | -1.9 |
| ALIBABA GROUP HOLDING LTD | -3.2 |
| XIAOMI CORP-CLASS B | -3.4 |
| CNOOC LTD-H | 0.4 |
| BYD CO LTD-H | -1.3 |
| PING AN INSURANCE GROUP CO-H | -6.9 |
| SEMICONDUCTOR MANUFACTURI-H | -4.8 |
| CHINA HONGQIAO GROUP LTD | -8.1 |
| GEELY AUTOMOBILE HOLDINGS LT | 2.5 |
| ZIJIN MINING GROUP CO LTD-H | -5 |
| Shanghai and Shenzhen's Most Heavily Traded by Value | 1-Day Change (%) |
|---|---|
| ZHONGJI INNOLIGHT CO LTD-A | -2 |
| EOPTOLINK TECHNOLOGY INC L-A | -3.5 |
| BYD CO LTD -A | 4.5 |
| CONTEMPORARY AMPEREX TECHN-A | -2.7 |
| SUNGROW POWER SUPPLY CO LT-A | -2.9 |
| ZIJIN MINING GROUP CO LTD-A | -3.4 |
| HGTECH CO LTD-A | -2.4 |
| GCL SYSTEM INTEGRATION TEC-A | 8 |
| SUZHOU DONGSHAN PRECISION-A | -9.3 |
| VICTORY GIANT TECHNOLOGY -A | -6.2 |
Last Night's Exchange Rates, Prices, & Yields
- CNY per USD 6.89 versus 6.90 Friday
- CNY per EUR 7.98 versus 7.97 Friday
- Yield on 10-Year Government Bond 1.83% versus 1.83% Friday
- Yield on 10-Year China Development Bank Bond 1.98% versus 1.98% Friday
- Copper Price -1.62%
- Steel Price 0.70%
KraneShares China ETF News delivers the latest news, insights, and analysis on the key drivers shaping China’s capital markets and China ETFs. As a pioneer in the China ETF market for over a decade, KraneShares provides investors with innovative access to China’s fastest-growing sectors, including technology, artificial intelligence (AI), internet, renewable energy, electric vehicles, humanoid robotics, and healthcare.
Explore our full range of U.S.-listed China ETFs designed to help investors access China’s evolving economy and long-term growth opportunities. View the full KraneShares China ETF list.
