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<Research>Daiwa: CN Mutual Funds' Allocation to HK Stocks Rises to 14.9% in 1Q, Setting New High, Expects Reinvestment in High-div. Stocks in Utilities/ Staples This Quarter
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The allocation proportion of Chinese mutual funds to Hong Kong equities climbed to a new high, with redemption pressures easing significantly as the stock market rebounded and nonferrous metals, autos and media being the most favored sectors of the funds, Daiwa released a research report saying. In contrast, Chinese mutual funds notably increased their positions in Hong Kong stocks in 1Q25, in line with the trend of significant southbound capital inflows into Hong Kong equities over the same period. The proportion of Hong Kong stock shareholding to total heavyweight stock investment by mutual funds rose to an all-time high of 14.9% as of 1Q25, compared with 11% in 4Q24. TENCENT (00700.HK), BABA-W (09988.HK) and XIAOMI-W (01810.HK) have ranked among the top 10 heavyweight stocks list for equity-oriented mutual funds, while only two Hong Kong stocks, naming TENCENT and MEITUAN-W (03690.HK), were on the list in 4Q24. The allocation proportion to non-ferrous metals also climbed by 1.3 ppts in 1Q24, thanks to soaring gold and copper prices. CHIFENG GOLD(600988.SH), KUAISHOU-W (01024.HK), BYD COMPANY (01211.HK) and SHANDONG GOLD(600547.SH) were among the top buys this quarter. In the face of the rapid escalation of the US-China tariff war since April, mutual funds are expected to adopt a more balanced sector and market allocation strategy in the current quarter, with a possible pivot back to high-dividend stocks in utilities and staples, as well as the A-share market as a whole. However, the broker believed that the expansion of Chinese mutual fund allocations to the Hong Kong stock market has been a long-term trend, mainly for investment portfolio diversification purposes. AAStocks Financial News |
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