FX168 Financial News Agency (Asia Pacific) reported that mainland Chinese investors have made record purchases of Hong Kong stocks, increasing their investments in the Hong Kong market against the backdrop of a weakening yuan and a recovery in risk assets.

According to data compiled by Bloomberg, as of December 20, traders in Shanghai and Shenzhen have bought stocks worth 778 billion Hong Kong dollars (approximately 100 billion US dollars) this year through the cross-border trading mechanism, marking the highest annual amount since the trading connection was established in 2016. Among these, stocks of Alibaba, Bank Of China, and CHINA MOBILE were among the most popular investment symbols.

As a series of stimulus measures launched by Peking pushed the benchmark Index upwards, the proportion of mainland investors' trades in the fourth quarter increased to a record 45%. Zeng Wenkai, Managing Director of Shengqi Asset Management Co., Ltd., stated that other factors contributing to this unprecedented southward buying include the weakening yuan, which has increased demand for US dollar assets.

In response to the economic slowdown, China has proposed to loosen its monetary policy for the first time in 14 years. The central bank may take more aggressive measures to cut interest rates and reserve requirements next year. China has also indicated that it will implement a more active fiscal policy, and authorities may take further stimulus measures.

The use of the term "moderately accommodative" in relation to monetary policy is the first time since 2009-2010 when China actively stimulated the economy following the Lehman crisis. Since 2011, the wording has been more neutral with "prudent." This time, it suggests a deeper financial easing, combined with further fiscal stimulus, to accelerate the resolution of insufficient demand issues.

"The key to the future performance of the Hong Kong market lies in the balance between the demand from mainland investors and the pressure of global capital outflow," Zeng said. However, he added that it is unlikely for mainland investors to become the largest holders of the Hong Kong stock market in the short term.

Since the trading connection was established, mainland traders have cumulatively purchased 3.3 trillion Hong Kong dollars worth of Hong Kong stocks.