Unusual anomaly! A-shares and Hong Kong stocks rise simultaneously, but southbound funds are countertrend selling a massive 27 billion HKD

Ask AI: Does the capital divergence phenomenon signal whether the rebound rally’s sustainability is real?

On March 24, both the A-share market and Hong Kong stocks saw an oversold rebound attack, with the entire trading board warming up across the board.

The A-share Shanghai Composite Index and the Shenzhen Component Index both rose by more than 1%, with total turnover across the two markets reaching 2.08 trillion yuan. More than a hundred stocks in the entire market hit the daily limit up, and market sentiment clearly rebounded. At the same time, Hong Kong stocks also strengthened: the Hang Seng Index closed up 2.79%, and the Hang Seng Tech Index rose 2.51%. The intraday trend held steady and moved upward. With the two markets synchronously resonating and repairing, this should have been a window period for capital to position in the same direction; however, the capital side produced an extreme and unusual pattern. On that day, southbound funds sold Hong Kong stocks net in large amounts against the trend—270 billion Hong Kong dollars—hitting a new recent single-day net selling peak. Although the market surged across the board, funds trimmed positions in the opposite direction. This mismatch directly became the most attention-grabbing core anomaly in that day’s capital markets.

Just when the market barely managed a synchronized recovery, southbound funds instead carried out large-scale selling. This unusual maneuver is far more worth attention than the rebound in A-shares itself. While this large amount of selling did not challenge Hong Kong stocks’ fundamentals or disrupt the upward momentum in Hong Kong stocks, it was jointly driven by cross-market capital rotation and short-term risk-avoidance sentiment—an immediate reflection of current domestic investors’ capital preferences.

The short-term opportunities from oversold repairs in A-shares attracted returning inventory capital within the market. Many domestic investors that had positioned in Hong Kong stocks earlier proactively reduced their holdings, then turned around to add to A-shares to seize the repair dividend. Coupled with the fact that uncertainty in external geopolitical risk still remains, the willingness of short-term bargain-hunting capital in Hong Kong stocks was stronger than usual. Even though Hong Kong stocks moved up in sync, they still chose to cut positions against the trend, ultimately forming this rare capital divergence.

This capital divergence directly reflects that the overall market is still in a relatively cautious mindset.

A-shares remain in a battle between existing capital. After a rebound without volume, the next phase is highly likely to see choppy back-and-forth trading. It’s not advisable to chase gains blindly. The short-term portfolio reallocation behavior by southbound funds through large-scale selling will not shake the core allocation logic of Hong Kong stocks—low valuation and high dividend yield.

At present, the overall risk appetite in the market remains relatively low, and funds are more inclined toward short-term arbitrage. Looking ahead, it’s still necessary to focus closely on changes in trading volume across both markets. To determine sustainability of the rebound, it needs to continue to expand with further volume.