Hong Kong stocks close higher amid volatility; southbound capital net buys for 11 consecutive days; AH premium narrows draws attention

On July 29, 2026, Hong Kong stocks hovered in a narrow range throughout the day, with the Hang Seng Index closing at 26,500 points, up 0.5%; the H-shares Index rose 0.7%, while the Red Chip Index edged down 0.1%. Market turnover was active, with main board turnover reaching HK$125 billion, slightly higher than the previous day. Notably, southbound capital continued its strong inflow momentum, with net buying of HK$8 billion today, marking the 11th consecutive trading day of net inflows, cumulative net buying exceeding HK$50 billion.

Southbound capital continues to increase positions, tech stocks favored

Data show that today's southbound capital mainly flowed into Tencent Holdings (00700) and Meituan (03690), with net buying of HK$1.2 billion and HK$0.6 billion respectively. Another heavyweight, CNOOC (00883), also received net buying of HK$0.5 billion. Analysts point out that recent accelerated southbound inflows are mainly based on recognition of the valuation trough of Hong Kong stocks, especially the tech sector after earlier adjustments, offering good value.

Historically, consecutive days of net buying by southbound capital often signal a medium-term rebound. A strategist at Everbright Securities International said: "The sustained southbound inflows reflect increased confidence of mainland investors in Hong Kong stocks, especially as large-cap tech stocks are expected to see earnings improvement, attracting long-term capital."

AH premium index falls, narrowing arbitrage space

Today, the AH premium index closed at 123 points, down significantly from 129 points in mid-July, hitting a near two-month low. This means the premium of A-shares over H-shares for the same company narrowed from nearly 30% to about 23%. The narrowing was mainly due to Hong Kong stocks outperforming A-shares recently and increased share buybacks of some H-shares.

For cross-border arbitrageurs, the decline in the premium index means the strategy of buying A-shares and selling H-shares is becoming less attractive. However, some stocks like China Molybdenum (03993) still have an AH premium exceeding 100%, offering significant arbitrage opportunities. Investors can focus on AH pairs with high premiums, combining fundamentals for arbitrage operations.

BYD Electronic surges on Apple order speculation

In terms of Hong Kong stock movers, BYD Electronic (00285) shot up in the afternoon, closing up 8.2% at HK$38.5, with turnover expanding to HK$1.5 billion. On the news front, market rumors suggest the company has secured orders for some components of Apple's next iPhone, possibly expanding to smart wearables. However, the company has not issued an official announcement. Analyst Ming-Chi Kuo of TF International earlier noted in a report that BYD Electronic's position in Apple's supply chain is rising, expecting Apple's revenue contribution to exceed 30% by 2026.

Besides BYD Electronic, other Apple concept stocks such as AAC Technologies (02018) rose 3.5%, and Sunny Optical (02382) rose 2.1%, with the sector performing actively.

Outlook and investment strategy

Looking ahead, the market generally expects Hong Kong stocks to oscillate in the 26,000-27,000 point range. The Fed's upcoming rate meeting is a short-term focus; if it signals dovishness, Hong Kong stocks could break higher. For sector allocation, two main themes are recommended: first, tech leaders benefiting from sustained southbound inflows; second, semiconductor and hardware manufacturing benefiting from AI computing power demand growth.

• Hang Seng Index short-term support: 26,200 points; resistance: 26,800 points.
• H-shares Index support: 9,200 points; resistance: 9,500 points.
• Key stocks to watch: Tencent Holdings (00700), Meituan (03690), BYD Electronic (00285).

Investors should manage risk and avoid chasing intraday movers. For derivatives, consider range trading using Hang Seng Index bull/bear certificates, but be mindful of knockout risk.

(Note: The above analysis is based on public information and market data and does not constitute investment advice. Stock market investment involves risk; please be cautious.)