To The Moon

In the second half of 2025, Hong Kong’s capital market is embracing a brand-new “spring.” It’s not just about the IPO pipeline gearing up or HKEX delivering record profits—what’s more important is the surging southbound capital from A-shares, which has rapidly fueled the ETF market’s momentum, turning it from a niche corner into the spotlight.

According to HKEX’s latest interim results, profits for the first half of 2025 soared nearly 40% to a record HK$8.52 billion, with average daily stock turnover reaching HK$222.8 billion and Stock Connect flows hitting new highs. Particularly striking is the surge of southbound inflows into ETFs: daily ETF turnover climbed to HK$33.8 billion, a jump of nearly 184%, significantly boosting both liquidity and valuations across the ETF market.

So far this year, more than RMB 2.7 billion in net southbound inflows into ETFs have marked a new record, highlighting mainland investors’ growing appetite for Hong Kong-listed ETFs.

In this era of “capital flows in full swing,” Hong Kong ETFs are no longer niche products. They are becoming essential tools for mainland investors to allocate global assets and tap into technology and thematic opportunities.

So here’s the question: in this blooming ETF garden, which one should you pick?

I. Getting to Know Hong Kong ETFs: Four Core Themes That Matter

Within Hong Kong’s ETF landscape, products related to China’s economic exposure typically fall into four core themes: Hang Seng Index ETFs, China Enterprises (H-shares) ETFs, Red-chip ETFs, and Hang Seng TECH ETFs. Each of these represents a different sector focus, structural logic, and investor preference.

1. Hang Seng Index ETFs: The Market’s Anchor

ETFs in this category, such as the $HSCEI ETF(02828)$ , track the Hang Seng Index, covering the 50 largest and most liquid blue-chip companies in Hong Kong. These include major financials, real estate, telecoms, and consumer names like HSBC, AIA, and China Mobile. The volatility is relatively low, and the investment base is extremely stable.

• Best for: Conservative, long-term investors seeking stability.

• Why invest: A diversified core holding for portfolios; ideal for systematic investing.

• Risks: Limited upside in the short term due to the heavy weighting of traditional sectors like finance and real estate, and persistent low valuations.

2. China Enterprises ETFs: Policy Tailwinds and Valuation Recovery

China Enterprises ETFs—such as the CSOP Hang Seng China Enterprises Index ETF ( $HSCEI ETF(02828)$)—track H-share companies listed in Hong Kong. These are typically large Chinese state-owned enterprises (SOEs) across finance, energy, telecom, and insurance sectors.

• Best for: Value-oriented investors focused on reform and policy cycles.

• Why invest: Extremely low valuations and attractive dividend yields; potential for strong rebounds when policy sentiment improves.

• Risks: High industry concentration and sensitivity to macroeconomic fluctuations.

3. Red-chip ETFs: Bridging Mainland Growth and Global Access

Red-chip ETFs track the Hang Seng China-Affiliated Corporations Index, including companies registered overseas but controlled by mainland entities. Representative names include Lenovo and CITIC Pacific. The sector exposure is more diversified compared to other categories.

• Best for: Investors who want exposure to China’s growth without the direct volatility of A-shares.

• Why invest: Backed by strong corporate parents, with more flexible operational models.

• Risks: Lower liquidity, modest trading volume, and limited near-term excitement.

4. Hang Seng TECH ETFs: The Pulse of China’s New Economy

Tracking the Hang Seng TECH Index, this ETF category (e.g., Hang Seng TECH ETF $CSOP HS TECH(03033)$ ) is a favorite among younger investors. It includes giants like Tencent, Alibaba, Meituan, and Xiaomi, offering exposure to China’s tech innovation.

• Best for: Growth-oriented investors with higher risk tolerance.

• Why invest: High long-term potential and strong alignment with China’s digital transformation.

• Risks: Prone to sharp swings and regulatory headwinds; heavily sentiment-driven.

II. Who’s Cheaper, Who’s Stronger? Comparing Fees, Size, and Liquidity

Let’s get down to the numbers—because when it comes to ETFs, cost and liquidity matter.

Not surprisingly, the Tracker Fund (02800 $TRACKER FUND(02800)$ ) stands out for its ultra-low fee and high liquidity—no wonder it’s a go-to for both retail and institutional investors. On the other hand, while the TECH ETF charges more, it continues to attract attention thanks to the magnetic pull of Chinese tech stocks.

III. Beyond the Numbers: Who’s Really Trading These ETFs?

After reviewing the hard data, another question naturally arises: “If the numbers are similar, how do I know which ETF is right for me?”

In truth, choosing an ETF isn’t just about finding the best value—it’s about choosing your own rhythm. It’s not just a product; it’s a community of capital.

Take the Tracker Fund and the China Enterprises ETF. These are favorites of institutions—think pension funds, asset managers, sovereign wealth funds. Their trading patterns are slow, steady, and deliberate. You won’t see dramatic price swings here because the money behind these ETFs moves like a cruise ship—measured and purposeful.

Contrast this with the Hang Seng TECH ETF. Its buyers are more like day-traders and swing investors—retail-dominant, momentum-driven, and very online. Their behavior amplifies volatility. Headlines and sentiment can move prices sharply, and this ETF often sees rapid inflows and outflows based on tech sector buzz.

Red-chip ETFs fall somewhere in between. With a mix of long-term individual investors and strategic capital, these products appeal to those who want China-linked growth without the noise of short-term hype.

So perhaps the better question to ask is: “What kind of market participant am I?” A patient builder? A nimble tactician? A trend follower? The right ETF isn’t just about cost or performance—it’s about fitting your financial personality.

IV. A Snapshot Recap: Which ETF Matches Your Style?

Invest in China with Tiger—your one-stop solution

Bullish on China but not sure how to allocate? With one Tiger account, you can invest in a range of China-related assets:

A-shares Connect: $HUATAI-PINEBRIDGE CSI 300 INDEX TRADING SECURITIES INVESTMENT FUND(510300)$ ; $CARD IN 500 EXCHANGE-TRADED INDEX SECURITIES INVESTMENT FUND(510500)$ ; $E-FUND GEM TYPE OPEN INDEX TRADING SECURITIES INVESTMENT FUND(159915)$ $Contemporary Amperex Technology Co.,Ltd.(300750)$ ; $Kweichow Moutai Co.,Ltd.(600519)$

Hong Kong Market: $Xinjiang Tianshun Supply Chain Co.,Ltd.(002800)$ $HSCEI ETF(02828)$ $CAM MSCI A50(02839)$ ; $TENCENT(00700)$ , $MEITUAN-W(03690)$ , $CHINA MOBILE(00941)$

US Markets: $Xtrackers Harvest CSI 300 China A-Shares ETF(ASHR)$ , $KraneShares CSI China Internet ETF(KWEB)$ , $iShares China Large-Cap ETF(FXI)$ , $Alibaba(BABA)$ , $BIDU-SW(09888)$ $PDD Holdings Inc(PDD)$

In addition, Tiger Trade’s signature features—TigerAI and Recurring Investment—make it easier to build exposure to Chinese assets:

• TigerAI Investment Assistant: New to Chinese assets? Ask anytime—e.g., “Which ETFs track the CSI 300?” or “Which China ADRs are trending lately?”—and get answers instantly.

• Recurring Investments for HK stocks & ETFs: Worried about timing? Tiger Trade supports daily/weekly/monthly recurring plans for Hong Kong stocks and ETFs to average your cost, build long-term positions, and pursue steadier outcomes.

Selected Historical Articles on China Assets:

• CN Assets Pick|01:China’s Core Indices vs. The U.S. Big Three

• CN Assets Pick|02:Why Is Smart Money Buying the Dip in Chinese Assets?

• CN Assets Pick|03 Tech Rivalry: How China’s “7 Sisters” Stack Up Against Wall Street’s Big Tech

• CN Assets Pick|04 Hong Kong ETFs in Full Bloom: Have You Picked the Right Theme?