Repost: Since the concentrated net outflow of foreign capital from Hong Kong and A-shares last year, capital in the Asia-Pacific region has mainly flowed to Japan. This also led to a window of rapid decline in U.S. Treasury yields starting in October last year, during which Hong Kong stocks barely rose, while the Nikkei index led global gains (China and Japan are the two largest markets in the Asia-Pacific region, acting as a seesaw). At that time, the most discussed logic was betting on the dual appreciation of Japanese stocks and the yen after the normalization of Japan's monetary policy. However, this logic was disproven after the Bank of Japan began raising interest rates this year, with the yen depreciating further and at the fastest pace among major non-U.S. currencies. As a result, some capital has recently flowed back to Hong Kong, which is the core reason why the Nikkei index has led declines in developed markets since Japan's rate hike on March 19, while Hong Kong stocks have led gains—essentially a reverse of last year's trend. Investment research institutions like UBS quickly released reports upgrading their ratings on mainland China and Hong Kong stocks to overweight, with particular emphasis on upgrading Chinese stocks listed in Hong Kong to overweight.

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