Southbound trading sees HKD 7.3 billion Tracker Fund outflow

Southbound Stock Connect traders pulled HKD 7.3 billion from the Tracker Fund on June 29, while directing net inflows of HKD 1.5 billion into Tencent and HKD 948.3 million into SMIC.

The rotation from passive index exposure into individual tech names reflects a shift in institutional positioning, with Citi recently noting that valuations of Chinese internet stocks are near bottom and attractive.

On the Shanghai leg, Tencent (0700.HK) recorded the highest net inflow at HKD 916.8 million, while the Tracker Fund (2800.HK) saw the largest net outflow of HKD 4.4 billion. On the Shenzhen leg, SMIC (0981.HK) led with HKD 1.5 billion in net inflows, against HKD 3 billion exiting the Tracker Fund. Hua Hong Grace (1347.HK) drew HKD 619.9 million in net inflows, while Alibaba (9988.HK) saw HKD 427.3 million in net outflows. Total southbound turnover reached HKD 135.89 billion, with net outflows representing 43.09 percent of that total.

The divergence between heavy outflows from the Hang Seng Index tracker and concentrated inflows into semiconductor and internet names suggests institutional investors are rotating into stock-specific bets rather than broad index exposure. The repositioning comes as CLSA reported the 618 shopping festival gross merchandise value rose only 1 percent year-over-year, intensifying competition among e-commerce platforms. Short selling data showed elevated activity across the most traded names, with Tencent short selling at HKD 2.16 billion representing 15.49 percent of its turnover, and SMIC short selling at HKD 1.64 billion or 15.99 percent. The rotation out of passive index products mirrors a broader trend in mainland A-share markets, where active stock picking has gained favor over index tracking amid sector divergence.

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