Mainland Chinese traders boost Hong Kong stock buying for fourth month as AI bets surge

Mainland Chinese investors continued their buying spree in Hong Kong stocks for the fourth straight month in September, according to financial data provider Wind. They purchased more shares than they sold, netting a total of HK$60.8 billion (US$7.7 billion) through the Stock Connect programme in the month, up from HK$10.4 billion in August.

This led to a cumulative net buying of HK$134.1 billion in the third quarter. The majority of their investments were focused on technology stocks, with a particular interest in artificial intelligence model developers. However, healthcare shares saw the heaviest selling. The inflows in mainland Chinese investors' enthusiasm for Hong Kong stocks, especially those unavailable on China's onshore markets, which remain more exposed to AI hardware makers.

This surge in buying helped Hong Kong stocks hold up relatively well in September, with the Hang Seng Index falling only 3.7 percent, despite concerns over rising capital costs and expectations of further US rate hikes. Notable purchases included HK$6.94 billion in Z.ai, an AI model developer, and HK$6 billion in Baidu, the search engine operator behind the Ernie Bot.

Among the most sold stocks were SMIC, China's biggest chipmaker, with net selling of HK$6.4 billion, Z.ai, which saw a 46 percent slump, Baidu, which fell 11 percent, and SMIC, which retreated 14 percent. The technology sector drew the most inflows, followed by industrial companies and financial firms. Healthcare recorded the largest outflows at HK$4.4 billion.

Analyst Kenneth Wu noted that the rebound in Hong Kong stocks is building after two months of corrections, but warned of risks such as military actions in US-Iran talks and weak Chinese data on consumption and investment. He suggested focusing on growth tech stocks and dividend stocks. The Hang Seng Index could range between 22,500 and 26,000 in the fourth quarter, with risks skewing to the downside, according to CCB International. The benchmark gauge ended the month at 24,271.20, up 0.3 percent.