Chinese retail investors stampede into Hong Kong ETFs
Bloomberg reports that Chinese investors are piling into onshore-listed ETFs tracking Hong Kong stocks, with inflows surpassing US$26 billion so far this year and momentum building since June. This is likely just the tip of the iceberg, given that Chinese households are sitting on some US$18 trillion in savings and term deposits.
Popular themes like artificial intelligence and biotech are fuelling the rush, as mainland retail traders chase the strong performance of Hong Kong shares and take advantage of a growing array of accessible products. Analysts point to a new generation of investors using fintech apps such as Alipay, making ETF investing seamless and bypassing the need for traditional brokerage accounts. The trend is expected to continue as more investors seek quick, tech-driven exposure to Hong Kong’s strongly performing market.
The Hang Seng Index has surged +32% YTD, twice the pace of gains in China’s CSI 300. According to Bloomberg, Chinese retail investors are embracing sector-specific ETFs for fast rotation into thematic trades, while institutions stick with broader trackers. Reportedly, despite accounting for just 10% of China’s ETF assets, Hong Kong equity ETFs have attracted more than half of all inflows in 2025, as retail investors seek a simpler, lower-barrier route to access the city’s market. Analysts expect this migration to continue as onshore ETFs offer a fast track for investors. The momentum can be self-supporting.
The Hang Seng index has surged past overhead resistance to make a fresh five-year high above 26,400. I see scope for further upside extension in the year ahead, with a retest of the record high above 32,800 not implausible through to December 2026. The bear market has really only just ended, and a new bull phase is underway. Meanwhile, valuation for the HS index still screens cheap relative to international markets.
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