Chinese Investors Make Record Stock Purchases in Hong Kong

Chinese investors have increased their interest in risky assets in Hong Kong amid the depreciation of the yuan, purchasing a record amount of Hong Kong stocks. According to data compiled by Bloomberg, investors in Shanghai and Shenzhen bought 778 billion HKD (100 billion USD) worth of stocks from Hong Kong by December 20 of this year, marking the highest annual total since trading links with the city reopened in 2016. Shares of Alibaba Group Holding Ltd., Bank of China Ltd., and China Mobile Ltd. were among the most purchased.

As Beijing's incentive measures boosted benchmark indices, investments from China reached a record high, increasing the city's trading shares to 45% in the fourth quarter. Zeng Wenkai, general manager of Shengqi Asset Management Co., stated that factors leading to unprecedented southbound purchases include the weakening yuan, which has created an appetite for dollar-denominated assets.

Zeng mentioned, "The factor that will determine the future trajectory of the Hong Kong market lies in the balance between onshore investor demand and the exit pressure from global funds." However, in the short term, it does not seem likely that Chinese investors will become the largest holders of the city’s stocks.