China investors turn sellers of Hong Kong stocks in rare reversal

Published Mon, Jun 1, 2026 · 03:02 PM

[HONG KONG] Chinese mainland investors turned net sellers of Hong Kong stocks for the first time in nearly three years in May, underscoring waning confidence in the city’s market.

They sold HK$3.6 billion (S$586.6 million) of equities via the trading links with Hong Kong last month, according to Bloomberg-compiled data, the first monthly outflow since June 2023. Mainland investors have recorded monthly net sales only about a dozen times since the programme was launched in late 2016.

While small relative to the nearly HK$100 billion in average monthly inflows over the past two years, the May outflow marks a break from a years-long trend of mainland investors supporting Hong Kong stocks.

The retreat comes as onshore shares gained momentum, with the tech-heavy Star 50 Index surging nearly 40 per cent since the start of April, while the Hang Seng gauge largely stagnated.

Mainland funds have regularly stepped in to buy the dip in internet heavyweights like Tencent as well as consumer and hardware stocks. They have also steadily increased exposure to dividend-paying state-owned enterprises. 

For much of this year, investors have increasingly treated Hong Kong as an avenue for tactical positioning rather than long-term allocation, with inflows skewed towards short-term trading in exchange-traded funds. BLOOMBERG