Chinese Investors Drive $90B Surge in Hong Kong Shares

Hong Kong's stock market has experienced a remarkable surge in the first half of 2025, driven by a historic $90 billion influx from mainland Chinese investors attracted by lower valuations and the city’s strategic position amid Sino-U.S. tensions. This influx has fueled a 21% rally in Hong Kong shares, with Chinese investors now accounting for 50% of daily trading volume, up from 30% in early 2024, and has narrowed the valuation gap between China's A-shares and Hong Kong-listed H-shares. The city has also seen a boom in initial public offerings (IPOs), including major listings by tech and electric vehicle companies such as BYD, Xiaomi, and CATL, contributing to a sixfold increase in share sale proceeds to about $33 billion. Hong Kong is emerging as a key hub for tech IPOs and dual-listed Chinese firms, with companies like Shein preparing for listings after challenges in Western markets. Investors view Hong Kong as a proxy for China's national champions, benefiting from diversification amid a weakening U.S. dollar and low global bond yields. The market's growth reflects increased confidence from global investors despite geopolitical tensions, positioning Hong Kong as a major financial center in Asia.