Southbound funds tracking | Approximately HKD 61.4 billion net inflow in March, continuing to increase holdings in leading tech stocks and selling off the raw materials sector

Ask AI · Southbound capital inflows slowed in March—how will geopolitical conflicts affect Hong Kong stock strategy?

Caixin Leishi March 31 News (Editor Feng Yi) Today, the March trading for Hong Kong stocks has officially wrapped up. According to Wind data, southbound capital recorded cumulative net inflows of approximately HK$61.399 billion this month, representing a decline of about 30% month-on-month compared with February.

Affected by the outbreak of geopolitical conflict in the Middle East, Hong Kong stocks in March showed a volatile downward trend. Southbound capital repeatedly carried out “buy low, sell high” turnover operations, and the number of days with net selling increased significantly.

This month, southbound capital had 12 trading days in which net buy/sell amounts exceeded HK$10 billion. Among them, 7 trading days were in the HK$20 billion-plus range, and there were multiple instances of short-term trades where it bought heavily on the previous day and sold the next day.

From an industry perspective, the information technology sector topped the list again for the third consecutive month in terms of net capital inflows, receiving net purchases of HK$25.022 billion this month. The main reason is that during the period the Hang Seng TECH Index kept hitting new lows; the decline in valuations prompted funds to buy the dip.

In addition, the non-discretionary consumer and energy stocks also received net inflows at the over-HK$10 billion level, clearly reflecting the market’s preference for defensive asset allocation under the influence of geopolitical risk.

Worth noting is that the raw materials sector continued to see outflows of HK$6.898 billion in March, marking the third consecutive month of net outflows. This reflects an acceleration of profit-taking following a high-level pullback in the non-ferrous metals sector.

By individual stocks, for southbound capital over the past 7 days:

Major net purchases: Tencent Holdings (0700.HK) HK$16.643 billion; Xiaomi Group-W (01810.HK) HK$6.509 billion; CNOOC (00883.HK) HK$5.607 billion; Pop Mart (09992.HK) HK$3.569 billion; Meituan-W (03690.HK) HK$3.060 billion.

Major net sales: SMIC (00981.HK) HK$5.534 billion; Alibaba-W (09988.HK) HK$3.129 billion.

Investment highlights

Tencent Holdings fell 6.56% cumulatively this month. In the first 5 days, funds increased holdings by 2.55 million shares, and short-term inflows have begun to slow.

Xiaomi Group-W fell 9% cumulatively this month. In the first 5 days, funds increased holdings by 67.50 million shares, and short-term inflows have begun to slow.

CNOOC rose 10.58% cumulatively this month. In the first 5 days, funds reduced holdings by 15.46 million shares, and short-term flows have shifted to being dominated by outflows.

Pop Mart fell 37.51% cumulatively this month. In the first 5 days, funds increased holdings by 17.23 million shares, and short-term flows still remain dominated by inflows.

Meituan-W rose 2.22% cumulatively this month. In the first 5 days, funds increased holdings by 27.60 million shares, and short-term inflows remain accelerating.

SMIC fell 25.44% cumulatively this month. In the first 5 days, funds reduced holdings by 24.82 million shares, and short-term outflows have accelerated.

Alibaba-W fell 16.72% cumulatively this month. In the first 5 days, funds increased holdings by 1.79 million shares, but over the past two days there have already been signs of outflows.

Note: Due to the HKEX T+2 settlement, this is actually data for the most recent 5 days up to two days ago

And today, southbound capital recorded net inflows of approximately HK$0.703 billion, including net inflows of about HK$2.522 billion via the Shanghai-Hong Kong Stock Connect, and net outflows of about HK$1.819 billion via the Shenzhen-Hong Kong Stock Connect.

According to data from the HKEX, today southbound capital:

Major net purchases: Xiaomi Group-W (01810.HK) HK$0.911 billion; Tencent Holdings (0700.HK) HK$0.431 billion.

Major net sales: CNOOC (00883.HK) HK$1.282 billion; SMIC (00981.HK) HK$0.438 billion; Alibaba-W (09988.HK) HK$0.328 billion.

(Caixin Leishi Feng Yi)