US stocks plummeted, why did Hong Kong stocks fall less? Understand this 280 billion, and you'll know what to buy and what not to buy now.
Conclusion first: Last night, US stocks fell sharply (Nasdaq -1.98%), China's ChiNext fell 2.70%, while Hong Kong's Hang Seng Index only fell 1.36%, making it the most resilient among the three markets. However, the reason for this resilience is not because Hong Kong stocks are "immune," but because mainland capital has been continuously buying through the Stock Connect—net purchases have exceeded HKD 280 billion so far this year. The key point is: this money is buying individual stocks like Tencent and high-dividend stocks, not the entire index. Therefore, my advice is straightforward: now is not a good time to buy the Hang Seng Tech ETF. If you want to participate, buy 'the individual stocks that are being continuously bought,' not the index.
First, let's explain a term: Southbound capital refers to the money mainland investors use to buy Hong Kong stocks through the 'Stock Connect' channel. It has been net buying all year, equivalent to a big buyer constantly stocking up in the Hong Kong stock market.
Why is it said to be 'picky'? Just look at yesterday's market: under the same negative news, Tencent rose, Meituan rose, and Alibaba fell. If the entire market was being supported, all three should have stabilized. In reality, the capital is picking stocks—Tencent has the new story of WeChat AI, and high-dividend stocks have dividends as a safety net. These are what Southbound is really buying.
So why can't we buy the index at a low? Because the overall 'valuation level' of Hong Kong stocks is linked to the US dollar interest rate (the higher the US dollar interest rate, the more suppressed the valuation of Hong Kong stocks). The current situation is: US inflation in May was 4.2%, a three-year high, the market expects about a 70% probability of a rate hike by the end of the year, and the US dollar index is near 100. In this environment, it's difficult for the index to move up as a whole—Southbound capital can make Hong Kong stocks fall slower, but it cannot change the interest rate environment.
Next, look at two time points: tonight at 20:30 (Beijing time), the US PPI (Producer Price Index, reflecting the increase in factory gate prices, expected to be 6.4% year-on-year) will be announced. If it also exceeds expectations, it means inflation pressure is still increasing; Next Wednesday (6/17) is the Federal Reserve's interest rate meeting, chaired for the first time by the new chairman, Warsh. His statement on inflation will determine the market direction for the next few months.
For Hong Kong stocks now, how would you choose? ① Only buy individual stocks that have continuous Southbound capital inflow and have their own performance story (e.g., Tencent); ② Wait for the US dollar index to decline significantly before buying the Hang Seng Tech ETF; ③ Buy the index in batches during the decline, betting on a rebound. Choose one in the comments and give your reason. I choose ①, and the reasons are all above.
$TENCENT(00700.HK) $MEITUAN(03690.HK) $BABA-W(09988.HK)
(The above are personal views and do not constitute investment advice. The market carries risks, and investment requires caution.)
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