Hong Kong stocks notch 4th monthly gain on record mainland demand

** As of Thursday, mainland investors purchased net of around HK$300 billion ($38.70 billion) worth of Hong Kong stocks via the Stock Connect, and their buying was set to hit a monthly record, according to the HKEX. ** Shares of Chinese tech giant Tencent jumped 22% in their best month since May 2009, as mainland investors substantially boosted their holdings.

Hong Kong stocks ended lower on Friday, though the index posted its fourth consecutive monthly gain - the longest winning streak since early 2019 - as mainland buying hit a monthly record via the Stock Connect linking it and the Asian financial hub.

** The Hang Seng index closed 0.9% lower at 28,283.71, while the China Enterprises Index lost 1.1% to 11,208.78 points. ** For the week, both HSI and HSCE declined 4%, amid worries over persistent onshore tight liquidity conditions that sparked speculation the People's Bank of China (PBOC) may be tightening policy.

** Though for the month, HSI advanced 3.9%, while HSCE increased 4.4%, both posting their fourth consecutive monthly gain, as mainland investors looked to the city as bubble fears emerged in the A-share market. ** As of Thursday, mainland investors purchased net of around HK$300 billion ($38.70 billion) worth of Hong Kong stocks via the Stock Connect, and their buying was set to hit a monthly record, according to the HKEX.

** Shares of Chinese tech giant Tencent jumped 22% in their best month since May 2009, as mainland investors substantially boosted their holdings. ** "Mainland institutional investors buy Hong Kong-listed stocks as they seek allocations to shares not listed in the A-share market," said Qu Xinghai, general manager at Tibet Hemu Asset Management.

** "They prefer giants including Meituan, Tencent, HKEX and Xiaomi, while they are not interested in cheap traditional firms," he added. ** Many also see bargains as the Hang Seng China AH premium index indicates A-shares of dual-listed AH companies trade at a more than 30% premium over their Hong Kong-listed shares.

** Looking forward, KGI Securities expected southbound inflows to continue in a stable and healthy pace. ** However, Sino-U.S. tensions remain a worry, as investors looked for more clues on Biden administration's policy toward China.

** "U.S. bans would put investors holding related stocks under big pressure, as they worry about potential further sanctions," said Hemu's Qu. ($1 = 7.7526 Hong Kong dollars)