"Major Institutions" Guosen Securities: Foreign capital flowed out of Hong Kong stocks by 170 billion yuan last quarter, while long-term foreign capital flowed into the pharmaceutical, biotechnology, and non-ferrous metal sectors

Guosen Securities published a report titled "Tracking Foreign Capital Quarterly Trends in the Stock Market for Q4 2025," indicating that in the fourth quarter of last year, northbound funds saw a slight inflow of 6.3 billion RMB, with long-term foreign capital outflowing approximately 14 billion RMB and short-term foreign capital inflowing about 26.2 billion RMB. Structurally, long-term foreign capital in A-shares mainly increased allocations in non-ferrous metals, electronics, and power equipment, while short-term foreign capital primarily increased allocations in telecommunications and dividends.

In the fourth quarter of last year, foreign capital continued to flow out of Hong Kong stocks by approximately 170 billion HKD, with long-term foreign capital and short-term foreign capital outflowing about 70 billion HKD and 100 billion HKD, respectively. Structurally, long-term foreign capital in Hong Kong stocks mainly flowed into pharmaceuticals and biotechnology, as well as non-ferrous metals, while short-term foreign capital only flowed into semiconductors and certain consumer sectors.

Regarding foreign capital in Hong Kong stocks: the structural pricing power in manufacturing and upstream resource products has increased. According to the stockholding details from the Hong Kong Stock Exchange's Central Clearing System, foreign capital continued to flow out of Hong Kong stocks by approximately 170 billion HKD in the fourth quarter, widening compared to the outflow scale in the third quarter of last year, with long-term stable foreign capital and short-term flexible foreign capital outflowing about 70 billion HKD and 100 billion HKD, respectively. In the fourth quarter, the amount of foreign capital held was approximately 18.9 trillion HKD, accounting for about 59% of the overall Hong Kong stock market, down from 60% in the third quarter of last year. The proportion of stable foreign capital holdings further decreased from 41% in the previous quarter to 39%, while the proportion of flexible foreign capital slightly increased from 19% to 20%.

Structurally, in the fourth quarter of last year, foreign capital in Hong Kong stocks mainly flowed into pharmaceuticals and biotechnology, as well as non-ferrous metals, with an increase in pricing power in manufacturing and upstream resource products. In terms of inflows, long-term foreign capital mainly flowed into pharmaceuticals (19.1 billion HKD) and non-ferrous metals (15.9 billion HKD), while short-term foreign capital only flowed into semiconductors (3.9 billion HKD) and certain consumer sectors; in terms of outflows, both long-term and short-term foreign capital consistently flowed out of hardware equipment (-35.2 billion HKD, -18.1 billion HKD), banks (-32.3 billion HKD, -12.1 billion HKD), and discretionary consumer retail (-18.9 billion HKD, -21.7 billion HKD), among others.

Additionally, from a stock perspective, although the proportion of foreign capital in most industries has declined, foreign capital still holds absolute pricing power in major financial, internet, and consumer sectors in Hong Kong stocks. From the latest changes in the fourth quarter, the proportion of foreign capital in advanced manufacturing sectors such as electrical equipment, machinery, and semiconductors, as well as upstream resource products like non-ferrous metals and coal, may have seen some increase