Chinese investors have significantly reduced their holdings in major Hong Kong-listed technology stocks during June, potentially impacting the market’s recent rally. According to Bloomberg calculations based on exchange data, mainland investors net sold a combined HK$46.4 billion ($8.9 billion AUD) worth of shares in Tencent, Xiaomi, and Alibaba through trading links with Hong Kong. This selling trend extended from May, raising questions about the sustainability of the tech sector’s performance.
The divestment occurs in anticipation of upcoming quarterly earnings reports and amid increasing competition within China’s e-commerce landscape. Earlier in the year, these tech stocks experienced a surge fueled by artificial intelligence optimism, partially inspired by DeepSeek. However, the recent selling pressure suggests a shift in investor sentiment. Tencent, a multinational technology and entertainment conglomerate, and Alibaba, a multinational technology company specialising in e-commerce, retail, Internet, and technology, have both seen their share prices stagnate since April.
While Tencent and Alibaba shares have traded sideways, Xiaomi’s stock has experienced some gains following the launch of its new car. The divergence in performance highlights varying company-specific factors influencing investor decisions. Vey-Sern Ling, a managing director at Union Bancaire Privee, suggests that the selling is driven by both profit-taking and the absence of fresh catalysts to propel further growth.
Ling also indicated that the selling from Chinese investors could limit further share price appreciation. He notes that previous gains were largely fueled by southbound flows, meaning investment funds flowing from mainland China into Hong Kong’s stock market. The reduction in this flow may present challenges for continued growth in these tech stocks.
