Mainland Chinese investors have been significantly increasing their activity in the Hong Kong Stock Exchange, setting a new record in stock purchases. According to data from the Wind Information database, mainland Chinese investors bought a record 29.62 billion Hong Kong dollars ($3.81 billion) worth of Hong Kong stocks on Monday. This surge in investment marks the highest level since the implementation of the “connect” program, which facilitates local investors’ access to a limited number of offshore-traded stocks.

The Hang Seng Index, dominated by tech companies, has been experiencing a three-year high, attracting mainland Chinese investors to the market. Notably, shares of tech giants Alibaba and Tencent, which are not available for trading in mainland China, witnessed substantial net purchases by these investors. The increased activity from mainland Chinese investors has been a key driver behind the recent surge in the Hong Kong Stock Exchange.

The Shanghai Connect, launched in November 2014, and the Shenzhen Connect, opened in December 2016, have played a pivotal role in enabling mainland Chinese investors to engage more actively in the Hong Kong market. On Monday, net purchases via the Shanghai Connect amounted to nearly 18 billion HKD, while those through the Shenzhen Connect reached 11.63 billion HKD.

Recent developments in China, including the government’s emphasis on supporting private sector tech innovation and its decision to expand consumer subsidies, have further fueled mainland Chinese investors’ interest in Hong Kong stocks. This positive sentiment towards Chinese equities is reflected in global macro strategy adjustments, with some analysts upgrading their view on Chinese stocks while downgrading the U.S. market.

Manishi Raychaudhuri, CEO of Emmer Capital Partners, highlighted the attractiveness of Chinese stocks, particularly those in Hong Kong, citing them as “cheap and under-owned.” He noted the potential for increased investment in emerging markets, especially in Asia, once global stocks recover from the current slowdown. Raychaudhuri pointed out the opportunities in internet stocks, large internet platforms, and consumption-related sectors, signaling a positive outlook for the Hong Kong Stock Exchange.

In conclusion, the influx of mainland Chinese investors into the Hong Kong Stock Exchange has driven record activity, with a focus on tech stocks and other sectors showing strong growth potential. This trend underscores the increasing importance of mainland Chinese investment in shaping the dynamics of the Hong Kong market and reflects the broader economic shifts impacting global investment flows.