International funds more than doubled their investment in Chinese stocks in July, while Southbound Stock Connect flows have already surpassed the full-year total for 2024.
HONG KONG – International investors are showing renewed confidence in Chinese equities, with foreign-domiciled funds more than doubling their investment to $2.7 billion in July, a significant jump from $1.2 billion in June.
The surge was driven by strong inflows from passive funds, which invested $3.9 billion during the month. This positive momentum was particularly noticeable in the latter half of July, with a notable acceleration in buying from U.S.-based passive funds.
Further demonstrating the improving sentiment, outflows from active funds, while still present, narrowed considerably to $1.2 billion from $1.6 billion in the previous month. Year-to-date active fund outflows have also shown marked improvement compared to last year.
The most powerful signal of confidence comes from the Southbound Stock Connect program, which allows mainland Chinese investors to buy stocks in Hong Kong. Inflows through this channel accelerated dramatically to $17 billion in July from $10 billion in June. This brings the seven-month total for 2025 to an impressive $110 billion, already exceeding the entire full-year figure of $103 billion for 2024.
This wave of investment is being strategically deployed. At the sector level, active fund managers increased their overweight positions most significantly in Media & Entertainment, Pharmaceuticals, and Insurance. At the company level, market giants like Tencent and Netease were among the most added stocks to international portfolios.
The data points to a clear and positive shift, with international capital flowing back into China’s markets at an accelerating pace, signaling a strong belief in the opportunities within specific sectors of the world’s second-largest economy.
