On July 30, 2026, Hong Kong Exchanges and Clearing Limited (HKEX) released market data for the first half of 2026. The average daily turnover of Hong Kong stocks reached HKD 150 billion, up 12% year-on-year. Net southbound capital (mainland Chinese funds investing in Hong Kong stocks via Stock Connect) inflow exceeded HKD 300 billion, a record high for the same period. This data highlights the liquidity and attractiveness of the Hong Kong stock market in the global capital market, and also sends a clear signal to investors: Hong Kong stocks remain an important platform for allocating overseas assets and capturing the growth dividends of high-quality companies.
Liquidity Advantages of Hong Kong Stocks Continue to Strengthen
As a hub connecting China and the global capital market, the Hong Kong stock market has seen continuous improvement in liquidity in recent years. In the first half of 2026, the average daily turnover was HKD 150 billion, up about 12% from HKD 134 billion in the same period of 2025. Among this, the average daily net inflow of southbound capital was about HKD 1.65 billion, up 8% year-on-year. The sustained influx of southbound capital benefits from the trend of diversification of asset allocation by mainland residents on one hand, and also reflects the attractiveness of the valuation trough effect of Hong Kong stocks to foreign capital on the other.
Why Does Southbound Capital Favor Hong Kong Stocks?
The continuous inflow of southbound capital is driven by multiple factors. First, the Hong Kong stock market boasts a large number of high-quality targets that are scarce in the A-share market, such as internet giants, biotechnology companies, and leading consumer enterprises. These companies often have higher growth potential and valuation appeal. Second, the Hong Kong market operates a linked exchange rate system, with the Hong Kong dollar pegged to the US dollar, providing investors with a natural exchange rate hedging tool. In addition, the trading system of the Hong Kong stock market is flexible, supporting T+0 trading and no price limit, attracting short-term traders and arbitrage funds.
Logic of International Capital Allocating to Hong Kong Stocks Remains Unchanged
Despite the uncertainties in the global macroeconomic environment, the medium- to long-term logic for international capital to allocate to Hong Kong stocks remains solid. According to HKEX data, in the first half of 2026, foreign capital accounted for about 30% of the turnover in the Hong Kong stock market, slightly up from the same period in 2025. Reasons for foreign capital favoring Hong Kong stocks include: Hong Kong stock valuations are at historical lows, with the Hang Seng Index's P/E ratio around 9 times, lower than major global markets; there are many Hong Kong stocks with high dividend yields, with some state-owned enterprises offering dividend yields over 5%; the Hong Kong stock market has a mature system and transparent regulation, suitable for long-term holding by institutional funds.
Expansion of Stock Connect and Optimization of Trading Mechanism
In May 2026, HKEX announced further optimization of the Stock Connect trading mechanism, reducing trading fees and expanding the scope of investable targets, adding about 50 small- and mid-cap stocks to the Stock Connect list. This move directly boosted the participation of southbound capital. In June 2026, the net inflow of southbound capital exceeded HKD 60 billion in a single month, setting a new monthly record. It is expected that with the continuous optimization of the Stock Connect mechanism, southbound capital will become an important stabilizing force in the Hong Kong stock market.
How Can Investors Seize Opportunities in Hong Kong Stocks?
For Vietnamese investors, Hong Kong stocks offer investment opportunities different from those in the Vietnamese stock market. First, the Hong Kong stock market has a more balanced industry distribution, with global leaders in sectors such as technology, consumer goods, and finance. Second, the Hong Kong stock market has a low correlation with the Vietnamese stock market, so allocating to Hong Kong stocks can effectively diversify portfolio risk. Investors can open accounts through Hong Kong brokers or Vietnamese institutions that support Hong Kong stock trading, with simple trading procedures and low cross-border capital costs.
Risks and Considerations for Investing in Hong Kong Stocks
Despite the positive outlook for Hong Kong stocks, investors still need to be aware of potential risks. The Hong Kong stock market is highly volatile and significantly affected by global liquidity changes; targets under Stock Connect are heavily influenced by mainland policies, such as internet regulation and real estate controls. In addition, although Hong Kong's linked exchange rate system is stable, the US dollar interest rate hike cycle may impact Hong Kong dollar liquidity. It is recommended that investors adopt a strategy of phased position building and diversified allocation, and pay attention to the earnings stability and dividend yields of Hang Seng Index constituent stocks.
Conclusion: Hong Kong Stocks Remain a Preferred Choice for Global Asset Allocation
The turnover and southbound capital data of Hong Kong stocks in the first half of 2026 indicate that the position of the Hong Kong stock market in global asset allocation has further improved. With the continuous recovery of China's economy, reforms of Hong Kong's financial market system, and the long-term inflow of southbound capital, Hong Kong stocks are expected to continue providing abundant investment opportunities for investors. For Vietnamese investors, allocating to Hong Kong stocks is not only a means to diversify geographical risk, but also an effective way to share in the growth dividends of global high-quality companies.
