The pace of mutual funds expanding into Hong Kong stocks has significantly accelerated. According to Wind data, as of April 14, 2026, 47 new Hong Kong stock-related funds have been established this year, far exceeding the 14, 22, and 22 funds launched in the same periods of 2023, 2024, and 2025. These products span various categories, including index funds, actively managed equity funds, and FOFs, with capital increasingly flowing into Hong Kong stocks via mutual funds, marking a key market trend this year.
Among product types, actively managed funds targeting the Hong Kong market have attracted strong investor interest. Morgan Stanley Fund's "MSCI China A-Share Inclusion Tech A" raised 4.424 billion yuan, making it one of the largest new Hong Kong-focused funds this year. E Fund Management's "Hong Kong Stock Connect Healthcare" and "Hong Kong Stock Connect Consumption" products raised 1.032 billion yuan and 840 million yuan, respectively. Dacheng's "Hong Kong Equity Hengxin" raised 2.254 billion yuan, while companies such as Baoying Fund, Industrial Fund, and Great Wall Fund also launched QDII equity funds like "Hang Seng Tech" and "Hong Kong Stock Value Select," with sizes ranging from 400 million to 800 million yuan.
Leading fund companies have demonstrated a clear advantage in Hong Kong market positioning, particularly those with extensive overseas investment experience, which have become the core force driving the issuance of Hong Kong stock funds. E Fund Management leads with eight products, covering sectors such as Hong Kong Stock Connect healthcare, consumption, and Hang Seng biotechnology, including ETFs, ETF feeder funds, and equity-biased hybrid funds. Qianhai SCE Fund issued four Hong Kong-related funds, while Ping An Fund and Southern Fund each launched three products, focusing on core sectors like technology and healthcare, with ETFs being their primary strategy.
The technology sector has been particularly attractive to new funds. Products such as Ping An's "Hang Seng Hong Kong Stock Connect Tech Theme ETF" and Qianhai Kaiyuan's "Hang Seng Hong Kong Stock Connect Tech Theme ETF" each raised over 800 million yuan.
Fund companies are adopting a dual strategy of "index + active management" to capture opportunities in Hong Kong stocks. On one hand, they are building tool-based allocation channels through ETFs; on the other, they are deepening stock selection via actively managed products to achieve comprehensive market coverage.
Industry analysts note that the issuance pace of new Hong Kong-related funds has accelerated noticeably this year, with average subscription periods shortening compared to the same period last year, indicating strong investor willingness to enter the market. Supported by the dual logic of "low valuation + high growth prospects," mutual funds' enthusiasm for southbound investments remains strong. With more Hong Kong-linked public fund products awaiting approval in the second quarter, the southbound investment wave is expected to continue, injecting liquidity into the Hong Kong market.
Jin Huang, a fund manager at Invesco Great Wall Fund, pointed out that the Hong Kong tech sector has undergone sufficient adjustments, with high-growth areas like artificial intelligence (AI), semiconductors, and innovative pharmaceuticals showing increased certainty. The CSI Hong Kong Stock Connect Technology Index rose 19.99% from early 2025 to the end of the first quarter of 2026, outperforming mainstream indices such as the Hang Seng Tech Index. Coupled with policy support for cutting-edge sectors under the 15th Five-Year Plan, the breadth of Hong Kong's tech ecosystem has significantly expanded.
"Market funds have been steadily increasing their holdings in Hong Kong stocks since early 2024. Recent outflows due to overseas liquidity shocks have temporarily reduced risk appetite. However, if global conditions stabilize, Hong Kong stocks' global allocation appeal will become more prominent, making the current period a favorable entry point," Huang stated.
Fu Beijia, a fund manager at China Europe Fund, expressed optimism about Hong Kong stocks' overall valuation recovery and structural profit growth opportunities. However, from a medium-term perspective, non-hard-tech cyclical sectors may perform better. On the profitability front, aside from some tech hardware facing earnings downgrade risks, cyclical companies with strong cash flow resilience may gradually release operational leverage. Valuation-wise, long-term interest rates are near peak pressure levels, with Hong Kong equity assets already pricing in valuation risks early, leaving them at significantly lower levels globally. From a risk premium perspective, despite macroeconomic volatility, long-term confidence remains in the stability premium of RMB assets, with global funds likely to reallocate and flow into Hong Kong stocks, increasing attention to "non-US" assets.
Data from Guotai Fund shows that southbound capital inflows into Hong Kong stocks exceeded 220 billion Hong Kong dollars in the first quarter, with trading volume rising year-on-year. The average daily turnover in March was approximately 300 billion Hong Kong dollars, an 8% increase year-on-year, indicating some market liquidity support. Additionally, the Hang Seng Stock Connect Internet Index and Hang Seng Stock Connect Technology Index are at their lowest valuations in nearly five years, highlighting their attractiveness.
However, Guotai Fund also noted that foreign risk appetite has not yet fully recovered, and geopolitical uncertainties and overseas interest rate fluctuations persist. In the short term, Hong Kong stocks are likely to experience volatile recovery. From a medium-term perspective, if external risks ease, the tech sector still holds potential for upward adjustment. Investors are advised to monitor market liquidity and risk appetite changes closely, adopting a gradual, low-entry strategy for steady positioning.