The Hang Seng Index surged nearly 2%! Southbound capital was selling—who’s stepping in? With the index continuing to rally and diverging capital flows emerging, can the Hong Kong market’s rebound persist? Can the recent rally evolve into a reversal?

The Hang Seng Index surged nearly 2%! Southbound capital was selling—who’s stepping in? With the index continuing to rally and diverging capital flows emerging, can the Hong Kong market’s rebound persist? Can the recent rally evolve into a reversal? The Hang Seng Index closed today at 25,808.93 points, up 1.96%. The Hang Seng Tech Index jumped 2.84%, opening high and advancing steadily throughout the session, closing near its intraday high. In terms of trading volume, total turnover reached HK$312.2 billion, moderately higher than in previous days. Leading gainers included heavyweight internet stocks (Tencent, Xiaomi) and the new energy vehicle sector, which strongly rallied and drove both the Hang Seng and Hang Seng Tech indices higher; consumer, financials, mainland banks, and Macau gaming stocks also recovered in tandem, with broad-based gains spreading across the market. Laggards included memory semiconductors, which continued their correction, moving in line with overseas chip stocks.

Despite the sharp rise in the index, southbound capital recorded a net outflow of HK$5.589 billion, marking several consecutive days of withdrawal. The core divergence: domestic investors (via southbound flows) are taking profits on rallies, while foreign capital has become the main driver behind this leg of the rally. The capital rationale: foreign investors are reallocating from high-valued AI hardware names in the U.S. market to undervalued internet and auto leaders in Hong Kong. This explains the key puzzle for many investors: why the index is surging while southbound capital is selling.

From a technical perspective, the index has reached a critical zone. Key factors to watch going forward include the following: First, in terms of short-term sentiment, the market posted a bullish marubozu candle today, so market sentiment is prone to a counter-trend correction—i.e., a pullback after a rally—over the next one to three trading days. Second, trading volume has expanded successively over the past three sessions, forming a rising volume ladder. There’s a common saying in the market: “rising volume ladders rarely sustain.” Therefore, after a short-term pullback, the key support level to monitor is today’s low of 25,487.16—if this level is breached, caution is warranted; if it holds, positions can be maintained. Third, whether the current market can stage a reversal hinges on whether the prior uptrend structure '9' can break above the bullish conversion line. Typically, once an uptrend structure '9' forms, the index or individual stocks tend to enter a consolidation or correction phase afterward. However, there’s one scenario where no correction occurs: if prices decisively break above the bullish conversion line. To calculate the bullish conversion line: first identify the K-line among the last nine with the highest high; then add that day’s range (high minus low) to its high point. Thus: 24,774.84 + (24,774.84 – 24,449.53) = 25,100.65. Today’s close at 25,808.93 clearly broke above this bullish conversion line. As long as prices remain above this level, the market remains strong; otherwise, caution is advised.

$Hang Seng Index (800000.HK)$ $TENCENT (00700.HK)$

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