According to a research report from BOC International, net inflows from southbound trading have slowed since 2026, with the Hang Seng Tech Index facing pressure amid rising geopolitical risks. As of April 21 this year, the average daily turnover for Hong Kong stocks reached HKD 272.5 billion, higher than the HKD 254.2 billion in the same period last year and the full-year 2025 average of HKD 249.7 billion. By April 21, the Hang Seng Index had accumulated a gain of 3.34%, while the Hang Seng Tech Index fell by 8.24%. The Hang Seng China AH Premium Index dropped from 123.46 on December 31, 2025, to 117.44 on April 21, 2026, indicating an average A-share premium of 17.44% over H-shares.

The report noted that since the beginning of this year, southbound trading recorded a net inflow of RMB 215 billion, a decrease of 62.1% year-on-year, primarily due to the high base effect from the first four months of 2025. Overall, the inflow momentum for southbound trading in 2026 remains resilient and continues to play a significant role in boosting investment sentiment and stock selection strategies. Over the years, mainland-related companies have gradually come to dominate the Hong Kong stock market. According to Hong Kong Exchange data, as of the end of March 2026, stocks of mainland-related companies accounted for 78.63% of the total market capitalization and 89.73% of the total turnover. As of April 21, southbound trading constituted 20.79% of Hong Kong's average daily turnover, compared to 23.36% in 2025, 17.3% in 2024, 14.1% in 2023, and 11.8% in 2022.

Looking ahead, the firm expects strong demand from mainland investors for Hong Kong stocks via southbound trading to persist in 2026, benefiting from a wider selection of high-quality technology and advanced manufacturing stocks, attractive valuations in the Hong Kong market, and high dividend yields. Southbound trading is anticipated to be a key driver for the long-term potential re-rating of the Hong Kong market. Investment behavior data indicates that southbound investors are focusing on the internet, new consumer, and semiconductor sectors.

BOC International suggested investors monitor the following actively traded southbound targets: TENCENT (00700): Consolidating its core competitiveness amid the AI wave, with continued strategic execution and flexible shareholder return initiatives; XIAOMI-W (01810): Actively investing in AI, robotics, and chips, with potential short-term results and long-term development of a "Human x Car x Home" AI ecosystem; POP MART (09992): Continuously improving efficiency, optimizing the supply chain, and monetizing IP to establish a foundation for long-term growth; BABA-W (09988): Firmly increasing investment to achieve medium-to-long-term goals in cloud business and rapid retail; KUAISHOU-W (01024): Boosting AI investment to strengthen the Kling advantage and enhance commercialization and content ecosystem integration; HUA HONG SEMI (01347): Possibly entering a product average selling price upcycle in 2026, with room for price increases in 12-inch products.