Southbound capital flows into the Hong Kong market reversed to a net inflow of HKD 16.8 billion this week, with its contribution to total market turnover rebounding to 21.4%. At the sector level, between April 16 and 22, the information technology and financial sectors continued to see net inflows, led by banking, technology hardware, and semiconductors. The innovative pharmaceuticals and communication services sectors, the latter primarily driven by China Mobile, also recorded net inflows. The energy sector experienced a further expansion of inflows, while the metals sector saw outflows.
On an individual stock basis, from April 20 to 24, CNOOC's net inflows continued to widen to HKD 2.3 billion. In contrast, Tencent witnessed a net outflow of HKD 1.4 billion, while Alibaba's net outflow expanded to HKD 2.4 billion. Following a period of consecutive gains, SMIC saw a reversal to a net outflow of HKD 700 million. Changfei Optical Fiber continued its net outflow of HKD 100 million.
Liquidity data reflected market uncertainty surrounding the Federal Reserve leadership transition, boosting expectations for a more dovish policy outlook. Concurrently, prospects of renewed US-Iran negotiations led to a decline in Middle East risk premiums, with the US dollar index dropping 0.3% on the day. The USD/CNH exchange rate rose 0.27% over the week to 6.83.
Crude oil prices climbed for the week, driven by increased transit risks in the Strait of Hormuz. Brent crude rose 17.2% to $105.9 per barrel, while WTI crude gained 14.9%. Precious metals faced downward pressure, with spot gold falling 3.2% for the week to $4,725 per ounce and silver declining 7.5% to $75.7 per ounce.
The US Department of Justice's decision to conclude its investigation into Fed Chair Powell, announced on Friday, improved market expectations for monetary easing and pushed Treasury yields lower. However, the 10-year US Treasury yield still increased by 5.6 basis points over the week to 4.30%. The 10-year Chinese government bond yield edged down by 3.6 basis points to 1.74%.
During the week of April 20-24, margin trading and securities lending on the A-share market continued to see a net inflow of RMB 53.2 billion, nearly erasing the outflows recorded earlier this year. In the ETF space, broad-market ETFs continued significant outflows of RMB 68.9 billion, while sector-specific ETFs saw net outflows of RMB 8.3 billion. The technology sector showed internal divergence: communications and 5G ETFs attracted net inflows of RMB 5 billion and RMB 900 million respectively, whereas semiconductor, chip, artificial intelligence, and robotics ETFs experienced net outflows of RMB 2.7 billion, RMB 3.8 billion, RMB 1.6 billion, and RMB 1.9 billion. Satellite, power grid equipment, and battery ETFs continued their net inflows of RMB 2.3 billion, RMB 1 billion, and RMB 1.3 billion respectively.
The proportion of short-selling turnover in the overall Hong Kong market decreased to 19%. Conversely, short-selling activity in the Hang Seng Tech Index rose to 21% of its turnover, while short-selling in leading internet stocks increased to 20%. For individual stocks, the short-selling turnover ratios for Meituan, JD.com, Alibaba, and Baidu rose compared to the previous week to 33.3%, 35.6%, 16.8%, and 42.9% respectively. The ratios for Tencent and NetEase decreased to 16.2% and 16.5%. The one-year percentile ranks for short-selling in Meituan, JD.com, Baidu, Tencent, and Alibaba climbed to 95.2%, 93.7%, 91.7%, 75.4%, and 65.9% respectively.
Southbound capital flows into Hong Kong turned to a net inflow of HKD 16.8 billion this week, with its trading share rebounding to 21.4%. At the sector level, between April 16 and 22, net inflows continued in the information technology and financial sectors, led by banking, technology hardware, and semiconductors. The innovative pharmaceuticals and communication services sectors also received net inflows. The energy sector's inflows expanded further, while the metals sector saw outflows.
On an individual stock basis, from April 20 to 24, CNOOC's net inflows continued to widen to HKD 2.3 billion. Tencent experienced a net outflow of HKD 1.4 billion, while Alibaba's net outflow expanded to HKD 2.4 billion. After a series of gains, SMIC saw funds turn to a net outflow of HKD 700 million. Changfei Optical Fiber continued its net outflow of HKD 100 million.
Mainland China's Hong Kong stock connect ETFs continued to see net inflows, adding RMB 1.6 billion this week. Inflows were seen in innovative pharmaceuticals, technology, and high-dividend ETFs of RMB 3.1 billion, RMB 600 million, and RMB 400 million respectively, while financial and consumer ETFs saw outflows of RMB 2 billion and RMB 200 million. The innovative pharmaceuticals sector has recorded substantial inflows for four consecutive weeks, totaling RMB 7.7 billion. Since the beginning of 2026, the overall market, technology, innovative pharmaceuticals, and consumer sectors have accumulated net inflows of RMB 53.8 billion, RMB 62.4 billion, RMB 12.7 billion, and RMB 700 million respectively, while the high-dividend and financial sectors have seen cumulative net outflows of RMB 9.5 billion and RMB 5 billion.
From a capital source perspective for Hong Kong stocks, foreign capital turned to a net inflow of HKD 1.1 billion this week (April 16-22), though year-to-date cumulative net outflows stand at HKD 10 billion. Chinese capital intermediaries and Hong Kong local intermediaries shifted to net inflows of HKD 500 million and HKD 15.8 billion respectively, with year-to-date cumulative inflows reaching HKD 1.2 billion and HKD 36.3 billion.
The market value of unlocked shares in the Hong Kong market this week reached HKD 5.2 billion, with an estimated HKD 11.7 billion expected to be unlocked next week. The cumulative value of unlocked shares since the start of 2026 amounts to HKD 262.8 billion.
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