South Korea’s turbulence seen as boon for Hong Kong stocks as capital migration under way
Foreign investors have pulled US$110 billion from Seoul this year, rotating into undervalued Chinese giants as momentum seen slowing for expensive tech stocks
Chinese technology stocks trading in Hong Kong are emerging as beneficiaries of tumult in the South Korean market, analysts say, pointing to investors rotating out of crowded bets and into undervalued assets, positioning for a rebound.
The Hang Seng Tech Index, which tracks Alibaba and other key Hong Kong-listed Chinese tech companies, has risen about 10 per cent from a June 26 low. Meanwhile, the Korea Composite Stock Price Index (Kospi) has technically slid into a bear market after a 20 per cent decline in the span, as increased scrutiny of margin trading left individual investors scrambling to exit their leveraged positions.
“The recent rebound in Hong Kong stocks is a reflection of the rebalancing of global capital,” said Chen Gang, an analyst at Soochow Securities. “The lagging assets are now absorbing the capital that is seeking diversification.”
The Hang Seng Tech Index is trailing global peers this year with a 15 per cent decline, as key constituents, including Alibaba, JD.com and Meituan, are more reliant on e-commerce revenue than on AI monetisation. And analysts note that the gauge is also short of AI hardware names – favourite bets for investors to ride the AI trade train. In comparison, the Kospi more than doubled in 2026 before the pullback, and the Nasdaq 100 has risen 15 per cent.
The tide shifted after wild swings in South Korean stocks triggered an exodus of foreign capital. Overseas traders sold a combined US$110 billion worth of Korean stocks this year through early July, with memory-chip maker SK Hynix alone accounting for about a fifth of the sell-offs, according to official data from the South Korean government.