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Hong Kong Stocks Face Uphill Battle to Repeat Gains

Global Capital Flow May Shift in Second Half of 2025

After a surprising first half of 2025, where Hong Kong stocks outperformed major markets, investors are wondering if this trend can continue. Shifting overseas capital flows could present a significant obstacle to replicating those gains.

US Market Performance Lags

The performance of United States equities, although reaching new highs, saw only single-digit growth in key indexes during the first half. This trailed behind Hong Kong and several European markets. The Russell 2000 index, for instance, struggled to recover from early-year losses, according to Lv Ziyi.

Overseas Capital Concerns

The critical factor is whether current market dynamics, where “the strong become stronger and the weak continue to be weak,” will persist. Alternatively, a significant shift in capital allocation could reshape the investment landscape in the coming months.

For example, recent data shows a cooling in foreign investment in Chinese markets, with a 30% drop in inflows compared to the same period last year (Reuters, 2025). This trend may impact Hong Kong, given its close ties to mainland China.

Second-Half Outlook

The question is whether Hong Kong’s stock market can maintain its leading position amid potential shifts in global capital flows. The coming months will reveal whether the first half’s trends will continue or if a new investment paradigm will emerge.