Analysis of the Impact of Southbound Capital Net Buying on Hong Kong Stock Market Sentiment and Capital Flows

1. Event Verification and Capital Flows
   : Social media discussions mentioned Southbound Capital net buying of HK$2 billion, but Daily Economic News [2] confirmed that the actual net buying amount on December 22, 2025 was approximately HK$3.125 billion, among which SMIC and Xiaomi Group-W received net buying of approximately HK$731 million and HK$687 million respectively, while China Mobile was net sold HK$579 million [2].
2. Long-term Inflow Trend
   : The cumulative net buying of Southbound Capital in 2025 has reached HK$1.4 trillion, far exceeding the full-year level of 2024 [3], reflecting mainland investors’ long-term allocation demand for high-quality Hong Kong stock assets; institutional analysis believes that some Hong Kong stock assets have entered a high-cost-performance range, driving the continuous inflow of Southbound Capital [4].
3. Market Impact
   : By the end of the third quarter of 2025, the market value of Southbound Capital holdings exceeded HK$6.3 trillion, accounting for 12.7% of the total market value of Hong Kong stocks, significantly enhancing its pricing power over Hong Kong stocks [3]; capital mainly flowed into core sectors such as technology and finance, providing sufficient liquidity support for the market [2].
4. Market Sentiment Reaction
   : The Hang Seng Index was in a consolidation phase around December 22 (closed at 25690.53 points on December 21 [5], closed at 25875.85 points on December 23 [6]). The inflow of Southbound Capital did not trigger significant market fluctuations, indicating that investors had certain expectations for the inflow of Southbound Capital, and market sentiment was generally stable [5][6].

1. Technology Sector Allocation Preference
   : Southbound Capital focused on inflows into technology targets such as SMIC and Xiaomi Group-W, reflecting mainland investors’ long-term confidence in the Hong Kong stock technology sector, which may promote valuation repair of the technology sector [2].
2. Dynamic Changes in Market Structure
   : The large-scale cumulative inflow of Southbound Capital has led to an increase in its pricing power over Hong Kong stocks. The investment behavior of mainland investors has an increasingly significant impact on the trend of Hong Kong stocks, and the “mainlandization” characteristics of the Hong Kong stock market have been enhanced [3].
3. Linkage of External Factors
   : There are cautious views in the market that attention should be paid to external factors such as changes in Fed policy, the global economy, and Sino-US relations, which may affect the subsequent inflow rhythm of Southbound Capital [7].

• Opportunities
  : The continuous inflow of Southbound Capital provides sufficient liquidity for Hong Kong stocks, and core sectors such as technology may usher in allocation opportunities [8]; the high cost-performance of high-quality Hong Kong stock assets attracts long-term allocation by mainland investors, providing fundamental support for the market [4].
• Risks
  : External factors such as the global macro environment, Fed policy, and geopolitics may lead to a slowdown in the inflow of Southbound Capital [7]; the flow of Southbound Capital is only one of the factors affecting the trend of Hong Kong stocks, and short-term market fluctuations are difficult to predict solely by capital flows, requiring multi-dimensional analysis [9].

On December 22, 2025, the actual net buying amount of Southbound Capital was approximately HK$3.125 billion, continuing the trend of large-scale inflows throughout the year, reflecting mainland investors’ long-term investment willingness towards Hong Kong stocks and forming support for market liquidity and pricing power. The technology sector is the main inflow direction, and future capital flows need to pay attention to changes in the external environment. This analysis objectively presents market dynamics and does not constitute investment advice.