Chinese mainland investors’ fund flows into Hong Kong stocks have sharply fluctuated in recent weeks, underscoring a lack of conviction to build long-term positions.
Onshore investors sold HK$27.4 billion worth of stocks in Hong Kong on Tuesday via a trading link after buying HK$29.7 billion in the previous session. Their quick turnaround this week reflects a similar pattern earlier in the month, when traders dumped shares after a record daily purchase on March 9.
The rapid swings suggest investors are waiting for clearer signs that Hong Kong stocks have bottomed, even as the Hang Seng Index has fallen about 10% from a peak in January. Rather than build positions in favorites like Alibaba Group Holding Ltd. and Tencent Holdings Ltd., mainland investors appear to be taking a short-term trading approach via exchange-traded funds.
“Southbound institutions have been moving in and out of three ETFs quickly in recent days and running swing trades with very quick in-and-out positioning,” said May Zhao, investment director at Star River Securities Ltd. “It’s largely about hedging and liquidity, though some are also using ETFs to bottom‑fish in beaten‑down sectors like tech and healthcare.”
The trading activity is mainly concentrated in some of the largest ETFs including the Tracker fund of Hong Kong, coinciding with sharp swings in Hong Kong’s benchmarks. The Hang Seng gauge rose 2.8% on Tuesday, rebounding from a 3.5% drop the previous day.
This pattern suggests investors remain cautious and are shying away from making concentrated bets on individual stocks, according to Yang Ruyi, a fund manager at Shanghai Prospect Investment Management Co.
Southbound flows remained modest on Wednesday while the index edged higher.
“The gap between index futures and the cash market has been wide enough to make arbitrage worthwhile,” according to CSOP Asset Management Limited in a written response to Bloomberg. “If you are trading through southbound, you really need the most liquid index ETFs as the core of the strategy.”
With assistance from Davy Zhu.
This article was generated from an automated news agency feed without modifications to text.
