FINANCE

Foreign Funds Edge Back Into Hong Kong Stocks as Mainland Outflows Ease

Published: Aug. 5, 2025 2:28 a.m. GMT+8

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Flags of China and the Hong Kong Special Administrative Region fly near an electronic screen displaying the Hang Seng Index in Hong Kong on March 15, 2022. Photo by Bloomberg.

Overseas investors made net purchases of Hong Kong-listed shares and U.S.-traded Chinese American depositary receipts (ADRs) for the first time in 41 weeks, signaling a tentative return to Chinese markets, even as foreign appetites for mainland stocks remained weak.

China International Capital Corp. (CICC), citing Emerging Portfolio Fund Research (EPFR) data, said that in the week of July 24-30, active foreign inflows into Hong Kong equities and ADRs reached $4.29 million, reversing a $320 million outflow the week prior.

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Overseas investors bought Hong Kong shares and US-traded Chinese ADRs for the first time in 41 weeks, with $4.29 million in net inflows during July 24-30.
Southbound trading via Stock Connect drove cumulative 2025 inflows to Hong Kong to $113 billion; Goldman raised its annual southbound inflow forecast to $160 billion.
Hong Kong’s assets under management rose 13% to HK$35 trillion by end-2024; foreign investors remain cautious due to geopolitical concerns and uncertain earnings.

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Who’s Who

China International Capital Corp.: China International Capital Corp. (CICC) is a financial institution that analyzes market data. CICC, referencing EPFR data, reported foreign active inflows into Hong Kong equities and ADRs of $4.29 million for the week of July 24-30, reversing a prior outflow. Additionally, CICC's chief overseas strategist, Liu Gang, noted that active foreign investors increased their underweight positions in Chinese equities as of the end of June.

Goldman Sachs: Goldman Sachs reported that despite $14 billion in net inflows into emerging-market equity funds, China stocks saw $5.8 billion in net outflows over the same period. They raised their 2025 forecast for annual southbound inflows via Stock Connect to $160 billion and lifted targets for the MSCI China Index and CSI 300 Index.

J.P. Morgan Asset Management: J.P. Morgan Asset Management's chief Asia market strategist, Tai Hui, indicated in late July that U.S. and European investors are tactically bullish on Chinese stocks but maintain a neutral to slightly positive long-term view. Tai Hui also noted that sustained foreign inflows into Chinese assets are unlikely without clearer signs of U.S.-China stability, improving corporate earnings, and stronger macroeconomic data, due to ongoing geopolitical risks.

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What Happened When

By the end of 2024：: Hong Kong’s total assets under management (AUM) grew 13% year-on-year to HK$35 trillion ($4.46 trillion), as reported in a mid-July 2025 survey.

Q1 2025：: Asia recorded $10.7 billion in net inflows, while China experienced a net outflow of $10.6 billion.

April to July 2025：: Asia saw $91.5 billion in net capital inflows, with $44.3 billion to Chinese mainland and Hong Kong.

As of the end of June 2025：: Active foreign investors had increased their underweight positions in Chinese equities by 1.3 percentage points below benchmark levels, compared with 1.1 points at the end of May 2025.

July 17-23, 2025：: Active foreign outflows from Hong Kong equities and ADRs totaled $320 million; active outflows from Chinese mainland A-shares totaled about $200 million; passive foreign inflows to A-shares were $1.32 billion and to Hong Kong stocks and ADRs $1.85 billion.

July 24-30, 2025：: Overseas investors bought Hong Kong-listed shares and U.S.-traded Chinese ADRs for the first time in 41 weeks, with active foreign inflows into Hong Kong equities and ADRs reaching $4.29 million.

Late July 2025：: Tai Hui, J.P. Morgan Asset Management, said U.S. and European investors are tactically bullish but strategically neutral to slightly positive on Chinese stocks.

By July 30, 2025：: Emerging-market equity funds recorded a 10-week streak of net inflows totaling $14 billion, but China stocks saw $5.8 billion in net outflows over the same period.