Mainland Investors Pivot to AI Stocks Amid Global Bond Volatility

Mainland Chinese investors shifted their preference from established internet giants like Alibaba and Tencent toward new-generation AI model developers in July and August. Minimax Group Inc. became the most popular Hong Kong-listed stock among southbound investors in August, with purchases totaling HK$10.6 billion ($1.4 billion). This follows a similar trend in July when rival Z.AI Co. led purchases. Since becoming eligible for the Stock Connect program on August 6, southbound investors have acquired a 9.7% stake in Minimax and approximately 11% in Z.AI.

This shift in equity markets coincides with global bond yields climbing to their highest levels in nearly two decades. The surge is driven by rising oil prices, inflation concerns, and expectations of interest-rate hikes. Federal Reserve Chairman Kevin Warsh and Governor Michael Barr have signaled a commitment to taming inflation, leading traders to anticipate a rate hike this month.

To counter this volatility, Treasury Secretary Scott Bessent implemented measures to contain yields, including doubling the size of Treasury bond buybacks. The economic pressure from higher borrowing costs comes as President Donald Trump faces the November midterms, with market stability further challenged by high government spending in the United States, United Kingdom, and Japan, alongside geopolitical tensions between the United States and Iran.