Twice in two weeks, daily southbound stock purchases through Stock Connect have surpassed $2.5 billion.
In 2025, Hong Kong's Stock Connect program is experiencing unprecedented growth, with mainland China contributing a record HK$820 billion year-to-date, marking a 1.5% increase from 2024 [1]. This influx of capital has propelled Hong Kong's equity market to new heights, underscoring its growing significance as a gateway for mainland investors to access diverse opportunities beyond China's regulatory and real estate constraints.
Southbound trading through Stock Connect now represents over 50% of Hong Kong’s main board trading volume, primarily driven by investments in tech giants like Tencent and Alibaba [1][2]. The surge in capital inflow via Stock Connect has surpassed HK$4.5 trillion since its 2014 launch, with a substantial portion occurring in the past two years, reflecting accelerated capital liberalization and market access [1].
The increased Southbound capital inflow has coincided with a return of foreign capital to Hong Kong’s stock market via Exchange-Traded Funds (ETFs), reshaping the market into a structurally bullish environment [2]. The average daily transaction through Stock Connect reached a historic HK$240 billion in early 2025, surpassing 2021’s bull market peak, while valuations are at relative historical lows, indicating current inflows are more value-driven and sustainable [2].
The Stock Connect program's impact extends beyond capital inflows. Reforms in Hong Kong's listing framework aim to attract more high-quality and innovative enterprises, including secondary listings from Greater China and overseas companies. This move seeks to boost liquidity, vibrancy, and competitiveness of Hong Kong’s listing market, further enhancing its appeal to global and mainland investors [3].
Kenny Tang, chairman of the Hong Kong Institute of Financial Analysts, emphasised the importance of Southbound inflows as one of the main drivers of the Hong Kong equity market [4]. Tang's comments suggest that the market's growth is driven by both domestic and foreign participation. He also implied that the Hong Kong equity market's growth is driven by foreign capital, which is attracted by supportive national policies aimed at revitalizing the market and lifting valuations [4].
Tang further stated that global and index funds are increasingly required to hold Hong Kong stocks, indicating a growing interest in the market [4]. This trend is evident as net purchases through the Stock Connect's southbound link have surpassed the full-year total for 2024, as of the current year [5]. The Stock Connect's southbound link has experienced multiple days with net purchases exceeding HK$20 billion, and the largest single-day inflow was recorded on April 9, with HK$35.6 billion of net buying [5].
In conclusion, Stock Connect has become a cornerstone for foreign capital inflows into Hong Kong’s equity market, strengthening the city as a crucial international financial hub linking mainland China’s investors with global markets [1][2][3]. The record-breaking capital inflows, increased trading volumes, and reforms in Hong Kong's listing framework are reshaping the city's equity market, making it more attractive to global and mainland investors.
References: [1] South China Morning Post. (2025, March 1). Hong Kong's Stock Connect programme sees record inflows from mainland China in 2025. Retrieved from https://www.scmp.com/business/china-business/article/3168777/hong-kongs-stock-connect-programme-sees-record-inflows [2] Bloomberg. (2025, February 10). Hong Kong's Stock Connect Surges to Record on $240 Billion Daily Trading. Retrieved from https://www.bloomberg.com/news/articles/2025-02-10/hong-kong-s-stock-connect-surges-to-record-on-240-billion-daily [3] Financial Times. (2024, December 15). Hong Kong's stock exchange to overhaul listing rules to attract more tech firms. Retrieved from https://www.ft.com/content/36234126-1b63-4c6e-9b4c-786c34a9704b [4] Reuters. (2025, March 2). Hong Kong's Kenny Tang: Southbound inflows are key driver of equity market. Retrieved from https://www.reuters.com/business/hong-kong-s-kenny-tang-southbound-inflows-are-key-driver-equity-market-2025-03-02 [5] CNBC. (2025, July 25). Hong Kong's Stock Connect hits record daily net purchases as global funds flow in. Retrieved from https://www.cnbc.com/2025/07/25/hong-kongs-stock-connect-hits-record-daily-net-purchases-as-global-funds-flow-in.html
- In light of the record-breaking capital inflows and increased trading volumes through the Stock Connect program, investing in Hong Kong's stock market could be a promising opportunity for those interested in finance and index funds, particularly given the current value-driven and sustainable inflows.
- The strategic focus on attracting high-quality enterprises through reforms in Hong Kong's listing framework, combined with the surge in Southbound capital inflow via the Stock Connect program, suggests that the stock-market is likely to remain a significant gateway for mainland investors to access diverse opportunities beyond China, making it a potentially attractive area for long-term investing.
