Analysis of Hong Kong Stock Market Turnover Changes and Liquidity Comparison

Image Source: pexels

In 2023, the Hong Kong stock market turnover performance was sluggish, recording only 229 listed company sale and purchase agreements throughout the year. In 2024, the daily average turnover of the HK stock market reached approximately USD 308 billion (calculated at 1 USD = 7.8 HKD), hitting a recent high, with significant increases in southbound fund inflows. In early 2025, although trading volume slightly decreased compared to the same period last year, market liquidity remained volatile due to interest rates and geopolitical risks. Turnover changes directly affect liquidity, forming a stark contrast with the A-share market, warranting further comparison.

Key Points

• After a sluggish 2023, HK stock market turnover significantly rebounded in 2024, boosting market liquidity; investors should monitor turnover changes to gauge market sentiment.
• HK stock liquidity is highly concentrated in a few large-cap stocks; investors should select stocks with better liquidity to reduce trading costs and risks.
• Southbound funds continue to flow into HK stocks, particularly favoring tech and financial blue-chip stocks; fund flows are a key indicator for judging market trends.
• HK and A-share markets differ in liquidity structure, with A-shares having more balanced liquidity; investors should choose markets based on their risk tolerance.
• Policy changes and international fund flows significantly impact HK stock turnover and liquidity; investors need to closely monitor related news and flexibly adjust strategies.

HK Stock Turnover Trends

Image Source: pexels

Recent Changes

Over the past decade, HK stock turnover has experienced multiple significant fluctuations. From 2013 to 2017, HK stock turnover maintained steady growth. In 2018, global economic uncertainty increased, leading to a brief decline in turnover. In 2019, with the listing boom of new economy companies, HK stock turnover rose again. In 2020, the pandemic impacted global markets, causing significant fluctuations in HK stock turnover. In 2021, market sentiment warmed, and turnover hit a new high. In 2022, affected by rate hikes and external market volatility, turnover began to decline. In 2023, HK stock turnover performance was sluggish, with a significant decrease in annual turnover and reduced market liquidity. During this period, investor confidence was low, and fund inflows decreased, leading to persistently low HK stock turnover.

In 2024, HK stock turnover saw a significant rebound. The daily average turnover reached approximately USD 308 billion (calculated at 1 USD = 7.8 HKD), hitting a recent high. Increased southbound fund inflows drove market activity higher. In early 2025, although HK stock turnover slightly declined compared to the same period in 2024, it remained at a relatively high level overall. During this phase, the market was influenced by interest rate policies and geopolitical risks, resulting in significant turnover fluctuations. Investor attention to HK stock turnover continued to grow, and market structure also changed.

Recent Highs and Lows

In 2023, HK stock turnover was at a low, with the market lacking clear positive news and strong wait-and-see sentiment among funds. In 2024, HK stock turnover hit single-day highs multiple times. According to a news report on March 5, 2025, the HK stock turnover reached HKD 2586.9 billion, equivalent to approximately USD 331.5 billion (calculated at 1 USD = 7.8 HKD), with the Hang Seng Index closing at 23,594.21 points and the Hang Seng Tech Index at 5,757 points. This data reflects a clear short-term high in HK stock turnover. Although the report did not provide specific dates and values for other highs or lows, it’s evident that from 2024 to early 2025, HK stock turnover fluctuated significantly, with market activity increasing.

Investors can observe turnover highs and lows to gauge market sentiment and fund flows. High turnover points typically occur during major policy positives or significant fund inflows; lows are often associated with increased market uncertainty and fund outflows. HK stock turnover changes directly reflect market liquidity and investor confidence.

Liquidity Status

Key Indicators

Liquidity is a critical indicator of market health. Common liquidity indicators for the HK stock market include daily average turnover, volatility, bid-ask spreads, and the contribution of large-cap stocks. Daily average turnover reflects the level of market fund activity. According to statistics, in 2021, the daily average turnover of HK stocks was about USD 214 billion (calculated at 1 USD = 7.8 HKD). By the first quarter of 2025, the daily average turnover of HK stocks exceeded HKD 2427 billion, approximately USD 311 billion, showing a significant liquidity improvement.

HK stock liquidity is highly concentrated, with about 20% of large-cap stocks contributing 90% of liquidity. This means most funds are concentrated in a few stocks, with other stocks having relatively low liquidity. In terms of volatility, from 2022 to 2023, the HK stock market’s break rate exceeded 60%, reflecting significant price fluctuations. Although no specific volatility figures are available, the high break rate indicates increased market risk.

Investors can quickly assess market liquidity by observing daily average turnover and volatility. High turnover generally indicates good liquidity; high volatility suggests sharp price movements and higher risk.

Turnover Impact

Changes in HK stock turnover directly affect market liquidity. From 2023 to 2025, the market exhibited several phenomena:

• Long-term holders continued to accumulate assets, withdrawing significant funds from the liquid market, reducing supply and putting pressure on liquidity.
• Market selling pressure slightly increased, but no large-scale sell-off occurred, indicating decent investor confidence and no drastic liquidity fluctuations.
• US ETF fund inflows slowed, weakening buying strength, challenging market confidence, and starting to impact liquidity with turnover changes.
• Fund distribution showed short-term price support, with clear active trading zones, indicating a strong correlation between turnover and liquidity.

HK stock turnover significantly rebounded in 2024, improving market liquidity. In early 2025, although turnover slightly declined, overall liquidity remained at a high level. Active trading of large-cap stocks played a stabilizing role in overall market liquidity. Conversely, when turnover decreases, market liquidity weakens, price volatility increases, and investors’ entry and exit costs rise.

Summary: HK stock liquidity is influenced by multiple factors, with turnover changes being the most direct indicator. Investors should closely monitor turnover and volatility data to adjust strategies timely.

HK Stock Turnover vs. A-Share Comparison

Image Source: pexels

Turnover Scale

The turnover scale of HK stocks and A-shares has always shown clear differences. In 2024, HK stock turnover significantly rebounded, with daily average turnover exceeding USD 308 billion (calculated at 1 USD = 7.8 HKD), hitting a recent high. The A-share market is larger, with the Shanghai and Shenzhen markets maintaining daily average turnover above USD 800 billion for a long time. Although HK stock turnover grew significantly from 2024 to early 2025, its overall scale remains smaller compared to A-shares.

After policy implementation, the Hong Kong market attracted substantial hot money inflows, driving the Hang Seng Index from about 11,300 points to over 18,000 points, with trading volume continuously expanding. This hot money not only supported HK stocks but also indirectly boosted A-share market gains. A-shares themselves have ample liquidity, and new CSRC regulations lowered the threshold for private wealth management, expected to attract more funds and further enhance market activity. Both markets showed rising turnover and liquidity trends under policy stimulus.

Liquidity Differences

HK stocks and A-shares differ significantly in liquidity. HK stock liquidity is highly concentrated, with about 20% of large-cap stocks contributing 90% of liquidity. This structure results in insufficient liquidity for some small and mid-cap stocks, increasing investors’ entry and exit costs. The A-share market, with a large investor base and diverse fund sources, has more balanced liquidity overall. Even during market fluctuations, most stocks maintain good liquidity.

In terms of fund sources, HK stocks mainly rely on international and southbound fund inflows, heavily influenced by external markets and policies. A-shares are dominated by domestic funds, with stronger policy control. From 2024 to 2025, despite HK stock turnover rebounding, liquidity challenges persisted, especially when market sentiment weakened or international funds flowed out, causing rapid liquidity drops in some stocks. A-shares, with a stable fund base, experienced relatively smaller liquidity fluctuations.

Tip: When comparing the two markets, investors should focus on turnover scale, liquidity structure, and fund sources, choosing markets based on their risk tolerance.

Influencing Factors

Fund Flows

International fund flows significantly impact the Hong Kong stock market. In May 2024, foreign capital flowed back to Hong Kong from Japan, driving a rapid stock market rise. Foreign fund flows are closely tied to macro policy changes, often driving turnover and valuation fluctuations. Southbound fund inflows continued to increase, with cumulative net purchases reaching USD 195 billion year-to-date (calculated at 1 USD = 7.8 HKD), a significant rise from last year. On February 18, single-day southbound net inflows reached USD 28.7 billion, a four-year high. High foreign participation can lead to short-term withdrawals after inflows, amplifying turnover volatility. Southbound funds favor dividend and tech blue-chip stocks, with Hong Kong banking seeing USD 21 billion in net inflows and Alibaba-W USD 12.2 billion in net purchases over the past month. Asian market foreign fund trends show funds returning to Taiwan, while HK and mainland stocks maintain strong performance due to AI investment enthusiasm. Clear inflow and outflow distributions reflect international funds’ direct impact on turnover and market trends.

Investors should closely monitor international fund flows, as inflows can drive market rises, while outflows may bring volatility and risks.

Policy and Structure

Policy changes and industry structure adjustments also affect the Hong Kong stock market. The Shenzhen comprehensive reform pilot advanced, allowing Greater Bay Area companies to list on the Shenzhen Stock Exchange, forming new “H+A” opportunities and aligning valuation systems with international pricing logic. Southbound fund inflows accelerated, with 2024 full-year net inflows reaching USD 1,036 billion, and the first four months of 2025 already reaching over 70% of 2024’s total. Monthly southbound net inflows continued to rise, reaching USD 216.7 billion in April, a high since January 2021. Funds mainly flowed into tech, consumer, and financial sectors, providing a floor for low-valuation blue-chip stocks and accelerating valuation recovery. In 2024, Hong Kong had 64 IPOs, fewer than last year, but raised USD 107 billion, up 80% from last year. Large IPOs returned, with average fundraising rising to USD 1.67 billion. New policies opened “H+A” opportunities for listed companies, but quality companies returning to A-shares may exacerbate liquidity stratification, leading to further market structure adjustments. Recently, most Asian markets faced net foreign selling, dragging HK stock liquidity, showing international fund flows and policy adjustments as key drivers of HK stock turnover and liquidity.

Market participants should closely monitor policy trends and industry structure changes, adjusting strategies timely to seize new opportunities.

Future Outlook

Turnover Trends

Over the next two years, market experts predict continued fluctuations in HK stock turnover. In early 2025, although turnover slightly declined, overall levels remained higher than 2023. Multiple factors will influence turnover, including international fund flows, interest rate policies, and geopolitical risks. Sustained international fund inflows could further boost turnover. If external markets become unstable, funds may temporarily flow out, reducing turnover. Tech, financial, and consumer blue-chip companies are expected to continue attracting significant funds, driving market activity. Investors can monitor daily average turnover and fund flows to gauge market sentiment.

Tip: Observing turnover changes helps predict market sentiment and fund movements.

Risks and Opportunities

The HK stock market will face several risks in the future. High international fund liquidity makes it susceptible to external economic and policy influences. If the US raises rates or geopolitical tensions worsen, funds may rapidly exit, amplifying market volatility. Some small and mid-cap stocks have low liquidity, requiring investors to note price fluctuations and trading costs. On the other hand, policy support and new economy company listings bring new opportunities. Continued southbound fund inflows are likely to benefit tech and financial sectors. Investors should closely monitor policy trends and fund flows, flexibly adjusting portfolios to seize market opportunities.

Note: Diversified investments and choosing high-liquidity stocks help reduce risks.

From 2023 to 2025, southbound fund inflows significantly increased, boosting HK stock liquidity. The A-share market is larger, with more balanced liquidity distribution. Investors can refer to the table below, adopting data-driven fund management strategies to enhance resilience to market volatility:

Investors should closely monitor southbound fund flows, daily average turnover, and policy changes, flexibly adjusting portfolios to enhance liquidity and risk resilience.

FAQ

Why does HK stock turnover fluctuate significantly?

HK stock turnover is influenced by international fund flows, policy changes, and market sentiment. Inflows or major policy announcements boost turnover, while uncertainty reduces it.

How does HK stock liquidity differ from A-shares?

HK stock liquidity is concentrated in large-cap stocks, with some small and mid-cap stocks having low liquidity. A-shares have diverse fund sources, with more balanced liquidity, making entry and exit easier.

How do southbound funds impact HK stocks?

Southbound fund inflows increase HK stock turnover and liquidity, favoring tech and financial blue-chip stocks, boosting sector performance. Outflows may amplify market volatility.

What risks should investors note when investing in HK stocks?

Investors should watch international fund flows, policy changes, and geopolitical risks. Small and mid-cap stocks have lower liquidity and higher price volatility, requiring caution.

How can turnover be used to gauge market sentiment?

High turnover indicates active market sentiment with clear fund inflows. Low turnover suggests investor caution and weaker confidence. Observing turnover changes helps predict market trends.

In 2025, the Hong Kong stock market’s volatile turnover and liquidity challenges often hinder investors due to high fees and cumbersome account management. BiyaPay offers a seamless solution to streamline your trading. No need for additional overseas accounts—BiyaPay lets you trade U.S. and Hong Kong stocks with a single account. Start now at BiyaPay!

BiyaPay supports real-time conversions across multiple fiat and digital currencies with transparent rate queries, ensuring cost clarity. With remittance fees as low as 0.5%, it significantly reduces fund transfer costs. Regulated by international financial authorities, BiyaPay guarantees secure transactions, empowering you to seize market opportunities. Visit BiyaPay today to enhance your investment efficiency!