21st Century Business Herald Special Correspondent Pang Huawai
On April 13, four Hong Kong stock theme funds were launched simultaneously, bringing the number of new products for 2026 to 53—1.79 times that of the same period last year.
Southbound funds provided the most definitive answer with a net purchase of nearly HKD 220 billion, and signs of overseas capital returning have also begun to emerge.
However, the story of &#34;hundreds of billions of Middle Eastern capital flooding in,&#34; which has been hyped by the market, presents two completely different sides according to interviews with several industry insiders. The real funding landscape behind this issuance boom is far more complex than imagined. The interplay of valuation, exchange rates, and geopolitical factors is jointly outlining a new main line for Hong Kong stock investment.
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<h4>Issuance Surge</h4>
On April 13, the Bosera Hang Seng Stock Connect Technology Theme ETF, Guolian Hang Seng Stock Connect Technology ETF, Yinhua CSI Stock Connect Medical Theme ETF, and GF Stock Connect Medical Innovation Selected Mixed Fund all launched on the same day.
This is just a snapshot of the wave of Hong Kong stock fund issuances in 2026. As of April 13, there have been 53 new Hong Kong stock theme funds issued this year, compared to only 19 at the same time last year—a staggering increase of 1.79 times.
Structurally, this year's newly issued Hong Kong stock theme funds show a distinct characteristic of &#34;passive as the main focus, active as a supplement.&#34; Among the 53 products, 38 are passive index funds, 2 are enhanced index funds, only 6 are equity mixed funds, and there are 7 QDII funds (6 passive + 1 active).
Among them, E Fund leads the industry with 9 products, including 6 ETFs and linked funds, and 3 active funds.
In terms of industry themes, technology, pharmaceuticals, and consumption have become the three main lines. Overall, fields such as information technology, the internet, biomedicine, automobiles, consumption, and low-volatility dividends are all covered.
&#34;This year's newly issued funds show a clear thematic characteristic, focusing heavily on Hong Kong stock dividends, Hong Kong stock innovative drugs, and Hong Kong stock internet technology in various sub-sectors,&#34; a public fund insider told reporters. &#34;This indicates that institutions are seeking more flexible excess return spaces.&#34;
In comparison to the same period in 2025, when newly issued funds mainly focused on innovative drugs and high dividends, the sectors were relatively singular. In 2026, the matrix of investment tools for Hong Kong stocks is rapidly improving—from technology to healthcare, from automobiles and consumption to information technology, multiple directions have corresponding passive products emerging.
Yang Delong, chief economist at Qianhai Kaiyuan Fund, believes that the surge in issuance is driven by the &#34;dual logic of valuation repair and fundamentals hitting bottom.&#34; &#34;The consensus among investors that Hong Kong stocks are a global valuation lowland has strengthened, and the concentrated layout by public fund institutions is a natural result.&#34;
Guo Shang Fund researcher Guan Xiaomin also pointed out that the continuous appreciation of the RMB to around 6.83 has increased the attractiveness of RMB assets, further boosting the issuance enthusiasm of Hong Kong stock funds.
<h4>Southbound buying spree, is Middle Eastern capital coming?</h4>
The confidence behind the hot fund issuance comes from substantial capital inflows.
Southbound funds have net bought nearly HKD 220 billion this year. As of April 13, southbound funds have net bought HKD 218.5 billion this year against the trend, becoming the most important incremental capital for Hong Kong stocks.
Among them, southbound funds once had a single-day net purchase exceeding HKD 37 billion, setting a historical record. The flow of funds has also spread from traditional dividend sectors to technology growth sectors.
However, recent market focus has been on overseas funds, especially the movements of Middle Eastern capital.
According to data from the Hong Kong Stock Exchange's custodian institutions, since early March, international intermediary funds have ended their unilateral outflow trend and shifted to two-way trading, with a cumulative net inflow of about HKD 210 million from March 2 to March 18, indicating that some overseas funds have begun to flow back into Hong Kong stocks, although the scale is not significant.
Regarding the recent market buzz about &#34;hundreds of billions of Middle Eastern capital flooding into Hong Kong,&#34; this claim has received cautious responses from several industry insiders during interviews.
&#34;Mature institutions cannot heavily invest in a short period,&#34; one insider bluntly stated, &#34;the so-called Middle Eastern capital coming to bottom-fish in Hong Kong Science and Technology is merely wishful thinking.&#34; He provided two reasons: first, most Middle Eastern funds invest through closed-end overseas funds, which cannot quickly redeem and transfer like open-end public funds; second, under the oil dollar system, Middle Eastern capital is naturally allocated to more dollar assets, and capital maneuvering takes time.
On the other hand, a different perspective was offered by a consulting firm representative, who revealed that inquiries from Middle Eastern clients regarding Hong Kong stock investments, bond allocations, and setting up family offices in Hong Kong have surged over 50% month-on-month. &#34;Some investors who migrated to Singapore and Dubai in earlier years are considering bringing their assets back to Hong Kong.&#34;
Other data shows that the proportion of Middle Eastern sovereign funds participating in cornerstone subscriptions for Hong Kong stock IPOs has increased from less than 20% at the beginning of 2024 to 38% to 39% by early 2026.
Zhang Fangfang from Paipai Wealth's public fund operations believes that the allocation behavior of overseas capital is shifting from &#34;initial exploration&#34; to &#34;more sustainable layouts.&#34; &#34;Behind this is a dual consideration of risk aversion and long-term strategy: geopolitical uncertainties make them focus on markets with stable rule of law and high correlation with the Chinese economy; at the same time, the undervalued, high-dividend assets in Hong Kong stocks align well with their long-term allocation goals.&#34;
However, a private equity CEO's attitude is more cautious: &#34;This year's net inflow of over HKD 200 billion is basically all passive accumulation from the mainland. Foreign capital and Middle Eastern capital have not yet verified any concrete buying. It is more about the market over-speculating based on some consultations and exchanges with Middle Eastern capital institutions.&#34;
During the period of international order reconstruction, globalization is shifting from &#34;efficiency first&#34; to &#34;security first.&#34; The macro research team at Huatai Securities pointed out in a report that when geopolitical risks rise and regional volatility in the Middle East increases, some cross-border funds pursuing liquidity, safety, and rebalancing capabilities will be more inclined to flow back to the Hong Kong market, which has a stable system, high openness, and abundant RMB assets, forming a &#34;Middle Eastern risk aversion - Hong Kong acceptance&#34; allocation logic
However, Zhang Qiyao, chief strategy analyst at Industrial Securities, reminded that the recent increase in foreign investment in Hong Kong stocks may primarily come from flexible funds in the Asia-Pacific region, rather than long-term capital from the Middle East.
<h4>Investment Main Lines Under Valuation, Exchange Rate, and Geopolitics</h4>
As of April 13, the Hang Seng Index has slightly risen by 0.12% this year, while the Hang Seng TECH Index has plummeted by 12.58%.
The consensus among various institutions interviewed is that Hong Kong stocks are currently valued at historical lows.
As of the end of March, the price-to-earnings ratio of the Hong Kong Stock Connect Technology Index was only 24.9 times, at the 28.2% percentile level over the past five years.
&#34;Compared to the 20-35 times price-to-earnings ratio of leading U.S. internet companies, Hong Kong's internet leaders are only between 10-25 times, showing a clear cost-performance advantage,&#34; said a fund manager.
The aforementioned public fund manager stated, &#34;In the context of rising short positions and a generally pessimistic market outlook, a rebound driven by short covering is likely to occur.&#34;
&#34;The Hang Seng TECH, pharmaceuticals, and other sectors have reached a suitable time for increasing positions,&#34; the fund manager candidly expressed.
However, low valuation does not mean no risk. A fund investment professional warned that Hong Kong stocks face a unique exchange rate dilemma: &#34;The Hong Kong dollar is pegged to the U.S. dollar. Currently, the renminbi is significantly undervalued, and there will be considerable appreciation pressure in the future. Investing in Hong Kong stocks this year may incur exchange rate losses. An appreciation of the renminbi would actually be more beneficial for renminbi-denominated assets.&#34;
Many industry insiders interviewed expressed optimism about future investments in Hong Kong stocks.
Guan Xiaomin believes that with the stable appreciation of the renminbi and the expectation that &#34;China is relatively stable and safe globally,&#34; overseas funds will gradually increase their investments in Hong Kong stocks.
However, geopolitical issues remain the biggest uncertainty. Since October 2025, changes in AI narratives and ongoing geopolitical conflicts in the Middle East have continued to suppress the performance of Hong Kong technology stocks.
In addition, a fund manager introduced that under the influence of the two main lines of changing AI narratives and geopolitical conflicts in the Middle East, the performance of Hong Kong technology stocks has been under pressure since the fourth quarter of last year. This year, discussions about AI bubbles overseas have intensified, with global funds preferring to invest directly in computing hardware that benefits from the expansion of AI infrastructure, while the Hong Kong TECH Index has a high proportion of internet platforms and software applications, placing it at a relative disadvantage in global fund reallocation. This is an important reason for the unsatisfactory performance of the Hang Seng TECH Index this year.
Based on the views of multiple respondents, current allocations in Hong Kong stocks can be developed along the following three main lines:
First, the main line of technological innovation and AI. Guan Xiaomin suggests focusing on structural opportunities in technological innovation. A public fund manager believes that Hong Kong technology leaders still have a significant cost-performance advantage compared to U.S. stocks, and the richness of AI application scenarios and the completeness of the industrial chain in China are long-term advantages.
Second, high dividend and income-generating assets. Zeng Fangfang pointed out that sectors with stable cash flow and high dividend yields can serve as a base. She emphasized that high-dividend assets align with the demand for allocation in a low-interest-rate environment.
Third, innovative drugs and overseas manufacturing. Guan Xiaomin added directions such as innovative drugs, overseas manufacturing, and new energy.
A private equity CEO provided a more aggressive operational suggestion: &#34;Based on low valuations and high safety margins, investors can seize opportunities to enhance investment cost-performance due to geopolitical shocks. Especially if subsequent market events cause significant pullbacks due to geopolitical conflicts, active buying can lay the foundation for future profit growth.&#34;
Yang Delong suggests that ordinary investors consider positioning in Hong Kong stocks that are &#34;wrongly killed&#34; quality stocks or quality funds, with the underlying logic being &#34;the safety of China and the undervaluation of Chinese assets.&#34;

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On April 13th, four Hong Kong stock thematic funds were issued on the same day, bringing the total number of new products in 2026 to 53, an increase of 1.79 times compared to the same period last year. Southbound funds net bought nearly HKD 220 billion, showing signs of overseas capital inflow. Although the market is hotly discussing the influx of Middle Eastern capital, industry insiders have differing views on this. The newly launched funds are primarily passive, focusing on technology, pharmaceuticals, and consumer sectors, indicating that institutions are seeking excess return opportunities

腾讯新闻 - 财经

Hang Seng Index

Hang Seng TECH Index

Hang Seng China Enterprises Index

HSCEI ETF

CSOP HS TECH

ISHARESHSI

ISHARESHSTECH

TRACKER FUND

HSTECH ETF

Who is buying Hong Kong stocks? Fund issuance has doubled, southbound funds are sweeping in, has Middle Eastern capital arrived?