Global investors are selling South Korean stocks while purchasing shares in Hong Kong. According to Bloomberg data and analyses from global investment banks, foreign investors are quickly unwinding their previous strategy of increasing their holdings in South Korea and reducing their exposure to Hong Kong, as reported by China Fund News on July 30.
Since the beginning of the year, foreign investors had short-sold Hong Kong tech stocks and used the cash to buy South Korean memory semiconductor stocks. However, this month, they have begun selling Korean stocks and covering their short positions in Hong Kong.
In July, the KOSPI index fell by nearly 30%, with foreign investors net selling over $100 billion in the South Korean stock market. In contrast, the Hong Kong stock market has shown a strong rebound this month, rising by more than 12%, with the Hang Seng Index increasing by 1.96% on July 29.
Bloomberg data indicates that the 20-day moving correlation between the KOSPI and the Hong Kong Hang Seng Tech Index has recently turned negative again. This suggests that foreign investors are selling South Korean stocks like Samsung Electronics and SK Hynix while buying Hong Kong tech stocks such as Alibaba and Tencent.
CITIC Securities stated, "As U.S. memory companies and South Korean semiconductor stocks, along with Chinese A-share AI-related stocks, have all undergone corrections after a surge in the first half of the year, global funds are seeking new investment opportunities. Hong Kong internet companies, which have relatively low valuations, are likely to benefit the most from this shift."
Goldman Sachs also noted in a report this month that "Chinese AI companies account for 16% of global AI-related revenue, but their market capitalization represents only 10%." They added that the proportion of global funds invested in Chinese AI-related stocks is only 1.2% of total portfolios, indicating a significant undervaluation and underexposure.
* This article has been translated by AI.
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