Mainlanders Scramble for AI-Related Plays

By the Editorial Team · Saturday, July 4, 2026

Mainland Chinese investors reversed their net outflow from Hong Kong stocks in June, largely driven by heavy purchases in AI-related firms such as SMIC and Knowledge Atlas Technology. This shift highlights a growing focus on technology sectors despite overall market weakness and significant sell-offs in consumer stocks amid concerns over Chinese consumer confidence and global economic uncertainty.

Mainland Chinese investors turned to purchasing Hong Kong stocks in June, driven largely by shares related to artificial intelligence (AI), despite a broader market downturn. Data from the Hong Kong stock exchange showed onshore investors acquired a net HK$27.1 billion of Hong Kong-listed shares through the Stock Connect scheme last month, a reversal from a net outflow of HK$3.6 billion recorded in May.

The AI sector attracted the bulk of this inflow, with Semiconductor Manufacturing International Corp (SMIC) and Knowledge Atlas Technology emerging as leading beneficiaries. SMIC drew HK$12.5 billion in net buying, while Knowledge Atlas, also known as Zhipu AI, secured HK$6.6 billion. Kingboard Holdings, an industrial products firm specializing in copper-clad laminates used in printed circuit boards, was the top single stock purchased under the southbound Stock Connect channel, with HK$20 billion in net inflows, propelling its shares up 84 percent in June. Tencent Holdings also saw notable inflows totaling HK$1.16 billion.

However, this appetite for AI and related technology stocks was countered by significant sell-offs in consumer-focused internet platforms such as Alibaba Group Holding and Meituan. Alibaba’s shares experienced net selling of HK$22.7 billion, while Meituan saw HK$3.4 billion in net sell-offs. Investors appeared to be responding to signs of weakening Chinese consumer confidence. Additionally, oil producer CNOOC recorded net outflows of HK$2.5 billion, influenced by declining oil prices amid easing tensions in the US-Iran conflict.

Despite the inflows into AI-related shares, the Hang Seng Index dropped 9.1 percent during June, marking its worst monthly performance in over two years. Analysts attributed this decline partly to the absence of many AI hardware manufacturers listed in Hong Kong, as well as a more hawkish stance from the US Federal Reserve, which prompted investors to rotate capital toward markets such as South Korea and Taiwan, regions viewed as hubs for AI development in Asia.

“Hong Kong stocks are facing a double whammy of fund outflows and higher borrowing costs overseas, which suppress valuations,” said Xu Chi, an analyst at Zhongtai Securities. He added that valuations in Hong Kong remain low and suggested that the market might rebound if expectations arise for a Federal Reserve interest rate cut or if growth in the global AI trade positively affects Hong Kong-listed firms.

Year to date through June, mainland investors have injected HK$305.5 billion into Hong Kong equities, representing a nearly 60 percent decline from the same period a year earlier. The trends suggest a shifting focus among mainland investors, balancing appetite for AI opportunities against concerns over consumer sector performance and broader macroeconomic risks.

This article was reported by synthesizing coverage from multiple independent news outlets to present a balanced, unbiased account. Read about our editorial standards. Spotted an error? Let us know.