TRACKER FUND sees HKD5.2B southbound outflow as BABA draws inflows

Southbound traders pulled HKD5.2 billion from the Tracker Fund on July 20 while pouring HKD1.9 billion into Alibaba's Hong Kong shares, exchange data showed.

The rotation out of the benchmark tracker into individual names reflects a stock-picking approach among mainland investors accessing Hong Kong markets through Stock Connect, said Kevin Ip, markets analyst at Edgen.

On the Shanghai-Hong Kong Stock Connect, Z.AI (2513.HK) recorded the highest net inflow at HKD608 million, while the Tracker Fund (2800.HK) saw the largest net outflow at HKD2.1 billion. On the Shenzhen leg, Alibaba Group (9988.HK, BABA-W) led inflows at HKD1.6 billion, with the Tracker Fund again the top net sell at HKD3 billion. Tencent Holdings (0700.HK) and Yangtze Optical Fibre and Cable (6869.HK, YOFC) also saw net outflows of HKD580.4 million and HKD468.1 million, respectively.

The HKD5.2 billion exodus from the Hang Seng Index tracker suggests mainland investors are betting against a broad market recovery, instead concentrating capital in select names such as Alibaba and AI-related Z.AI. The shift comes as traders position ahead of corporate earnings, with JPMorgan forecasting Tencent's second-quarter revenue to rise 9 percent year over year. YOFC, which surged 8.1 percent on the day, earlier said it expects interim net profit to jump as much as 9.14 times from a year earlier.

Total southbound trading turnover reached HKD125.07 billion, with net flows effectively balanced. Southbound flows represented 40.82 percent of total transaction volume, showing the growing influence of mainland investors in Hong Kong's equity market.

This article is for informational purposes only and does not constitute investment advice.