South Korean mom-and-pop investors are pouring into the Hong Kong stock market this year, chasing a rally in blue-chip Chinese tech names, with their holdings hitting $2.4 billion as of Aug. 12, the highest in four years.
The market value of Hong Kong-listed stock holdings held by Korean retail investors has jumped 33.5% from the end of 2024 and 41.7% from end-2023, nearing the five-year peak of $3.1 billion reached in 2021, according to the Korea Securities Depository (KSD) on Thursday.
Xiaomi Corp. was the top Hong Kong stock pick among Korean investors, with holdings valued at $238.9 million.
The runner-up is Tencent Holdings Ltd. with $225.7 million, followed by BYD Co. with $186.2 million, Alibaba Group Holding Ltd. with $182.2 million and Semiconductor Manufacturing International Corp. with $91.8 million.
Year to date, these stocks have gained between 20% and 79%.
Global battery giant Contemporary Amperex Technology Co. (CATL), the sixth-largest holding among Korean investors at $86.1 million, has surged 35% since its Hong Kong debut in May.
RECOVERY GAINS TRACTION
Korean investors’ rush into Hong Kong stocks comes as the city’s main indices have rapidly recovered since the start of the year.
(Courtesy of Getty Images) Hong Kong’s main stock market benchmark Hang Seng Index ended at 25,613.67 on Wednesday, up 27.7% from the first trading day of this year, according to the Hong Kong Exchanges and Clearing Ltd. (HKEX).
The Hang Seng China Enterprises Index (HSCEI), or the Hong Kong H-share Index tracking heavyweight mainland Chinese stocks listed in Hong Kong, also rose 25.5%.
Over the same period, the S&P 500, a stock market index that tracks the stock performance of 500 leading companies listed on US stock exchanges, climbed 9.9%.
Capital inflows from mainland China have surged into heavyweight Hong Kong-listed stocks, fueled by a tech rally sparked by the DeepSeek frenzy.
According to Wind, a China-headquartered financial data provider, Hong Kong’s stock market has attracted HK$910 billion ($116 billion) in mainland capital so far this year, already surpassing the record high HK$807.9 billion set for the first time last year.
The tariff dispute between Beijing and Washington has done little to dent investor enthusiasm.
The Hang Seng Index took a breather in April as the trade war intensified, but soon bounced back to set fresh records.
Hong Kong stocks have gained further momentum after the world’s two largest economies extended the “tariff truce” by another 90 days until November, while softer US inflation bolstered expectations for Federal Reserve rate cuts.
(Courtesy of Getty Images) “AI achievements like DeepSeek have raised expectations for a shift in China’s national growth model,” said Kim Kyung-hwan, an analyst at Hana Securities Co.
“Short-selling in Hong Kong stocks has fallen to its lowest level since the pandemic, thanks to the financial authority’s strong commitment to buoying the stock market.”
ROSY OUTLOOK
Hong Kong’s stock market is expected to extend its growth streak in the second half of this year, driven by anticipated US rate cuts and China’s strong economic stimulus.
Beijing is preparing a series of stimulus packages aimed at more than offsetting the prolonged property market slump.
In July, the country’s consumer prices were flat, while producer prices fell 3.6% from a year ago, extending the losing streak for 34 consecutive months. The data underscores lingering concerns about a recession and deflation.
The weakening US dollar is also boding well for Hong Kong stocks, which account for a large share of emerging markets, said Meng Lei, a Chinese stock strategy analyst at UBS Securities.
Citigroup forecasts the Hang Seng Index to hit 25,000 this year and 26,000 in the first half of 2026.
