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Mainland Chinese investors snap up a record amount of Hong Kong stocks

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Hong Kong’s stock exchange reported its highest quarterly profit in nearly four years after China’s stimulus measures boosted trading and listing volume.

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BEIJING — Mainland Chinese investors are piling into the Hong Kong stock market at record volumes as its tech-heavy Hang Seng Index trades around three-year highs.

Net mainland Chinese purchases of Hong Kong stocks hit a record 29.62 billion Hong Kong dollars ($3.81 billion) on Monday, according to the Wind Information database.

That was the most since the Hong Kong stock market launched its “connect” program with the mainland, allowing local investors easier access to a select number of stocks traded offshore. The Shanghai Connect launched in November 2014, while the Shenzhen Connect opened in December 2016.

The Hang Seng Index traded around 0.7% lower Tuesday morning following a sharp sell-off in U.S. stocks overnight on worries about the impact of tariffs on global growth.

Net buys via the Shanghai Connect reached nearly 18 billion HKD on Monday, while those from the Shenzhen Connect reached 11.63 billion HKD, the data showed.

Hong Kong-traded shares of Alibaba and Tencent, both of which are not traded in mainland China, saw the largest net purchases, according to Wind data.

China last week affirmed its pro-growth stance by emphasizing plans to support private sector tech innovation, and increasing its fiscal deficit to a rare 4% of gross domestic product including an expanded consumer subsidies program.

There could be a significant reordering of investment flows out of the U.S. and into Europe and Asia

Citi’s global macro strategy team on Monday upgraded its view on Chinese stocks — namely the Hang Seng China Enterprises Index — to overweight, while downgrading the U.S. to neutral.

“One key reason why we have not been focused on Chinese equities is tariff risk,” the analysts said.

“Abstracting from this issue, we believe the case for China tech was clear. A) DeepSeek proved that China tech is at the Western technological frontier (or beyond), despite the export controls. This was followed by the release of Tencent’s Hunyuan (an AI video generator) and Alibaba’s QwQ-32B,” they added.

‘Cheap and under-owned’ stocks

Chinese and foreign institutional investors started piling back into Chinese stocks after Beijing started announcing more forceful stimulus plans in late September. Chinese equities got another boost after the emergence of DeepSeek’s latest model in late January prompted a global tech sell-off. More major tech companies are traded in Hong Kong than in mainland China.

Manishi Raychaudhuri, CEO of Emmer Capital Partners, said investors could soon pour money back into emerging markets, particularly Asian emerging markets, once global stocks emerge from the current rut.

“I would say largely it would still be Greater China, which means largely Hong Kong, China. The stocks are cheap and under-owned,” Raychaudhuri told CNBC’s “Street Signs Asia” on Tuesday.

“We have seen some degree of consumption boost in the form of what the policymakers have been doing since January. It is not yet to the full extent that the market would like to have but at least it is a departure from the trend of many years,” he continued.

“So, right on top of my list, it would still be Hong Kong, China, the internet stocks, the large internet platforms and also some of the consumption-related names, mostly in athleisure, the restaurant stocks and other travel and tourism-related names,” Raychaudhuri said.

— CNBC’s Sam Meredith and Anniek Bao contributed to this report.

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State AGs urge Meta to clean up platform

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New York Attorney General Letitia James speaks during a press conference at the office of the Attorney General on July 13, 2022 in New York City.

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A group of 42 state attorneys general are calling on Meta to curb the rise of investment scams on Facebook that fraudulently use the images of Warren Buffett and other famous figures, New York Attorney General Letitia James said Wednesday.

James said in a news release criminals are consistently evading Meta’s automated and human review systems to post fake ads that leave retail investors saddled with millions of dollars in losses. Her office continues to see the scams months after reporting them to Meta, she added.

The ads, touting access to Buffett, Elon Musk or Ark Invest’s Cathie Wood, lure Facebook users to join chat groups on Meta-owned messaging platform, WhatsApp, according to the New York AG.

There, users are unwittingly involved in alleged pump-and-dump schemes, where criminals boost the price of thinly traded stocks and quickly sell for a profit, leaving small investors with losses.

Meta, the parent company of Facebook, Instagram and WhatsApp, is struggling to control the rise of cyber scams on its platforms and is a “cornerstone of the internet fraud economy,” the Wall Street Journal reported last month. The problem is global in nature, with one notable lawsuit being brought by an Australian billionaire who alleges that Meta’s artificial intelligence-run advertising program created and amplified false ads using his likeness.

“Thousands of Facebook users have lost hundreds of millions of dollars to these scams and Meta must do more to stop these fraudulent ads from running on its platforms,” James said. “I am leading a bipartisan coalition calling on Meta to step up its review of ads to stop these scams. I also urge all New Yorkers to be extra careful before putting their money in investments they see advertised on social media.”

Source: New York State Attorney General’s office

The AGs urged Meta to boost its policing of ads, including with more human review, saying that unless they curb the scams, Meta should stop running investment ads altogether.

Joining James were AGs from states including California, Connecticut, Georgia, Massachusetts, Michigan, New Jersey and Pennsylvania.

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Stocks making the biggest moves midday: OKLO, CHWY, QUBT, GTLB

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Here’s the inflation breakdown for May 2025 — in one chart

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David Paul Morris/Bloomberg via Getty Images

The annual inflation rate increased slightly in May as an uptick in grocery inflation somewhat offset lower prices at the gasoline pump.

And while inflation was relatively tame, economists said they expect President Trump’s tariff policy to raise consumer prices in coming months — and that there was already some evidence of their impact.

The consumer price index, an inflation barometer, rose 2.4% in the 12 months through May, up from 2.3% in April, the Bureau of Labor Statistics said Wednesday.

‘Calm before the inflation storm’

That increase to the annual inflation rate was largely due to a data quirk called “base effects,” economists said. (Basically, inflation one year prior, in May 2024, was unusually low, making the May 2025 numbers look high by comparison.)

The monthly inflation rate paints a rosier picture and gives a better indicator of underlying trends, economists said: CPI increased 0.1% from April to May, down from 0.2% the prior month, the BLS said.

A consistent monthly rate around 0.2% would generally be adequate to bring inflation down to the Federal Reserve’s long-term target, economists said.

“It was a very good report,” said Mark Zandi, chief economist at Moody’s. “Basically, it says inflation has finally gotten back to the Federal Reserve’s annual inflation target.”

However, tariffs President Trump levied on many countries and products will likely start to show up noticeably into the summer and fall, he said.

“I think it’s the calm before the inflation storm,” Zandi said. “This [report] still reflects the disinflation that began a few years ago and continued on through the month of May.”

Tariff impact on energy prices

That said, tariffs already had some impact on consumer prices in May, economists said.

For one, gasoline prices fell almost 3% from April to May, according to the BLS. They’re down 12% from a year ago, it said.

This is largely the result of falling oil prices, which reflect concerns about a slowdown in global economic growth due to tariffs, said Bernard Yaros, lead U.S. economist at Oxford Economics.

U.S. inflation rises 0.1% in May from prior month, less than expected

Lower energy prices filter down to the gasoline pump and lower household bills, he said. Lower oil prices also feed through more broadly to reduced costs for transportation, in categories like airline fares, Zandi said.

Airfare fell about 3% from April to May and is down 7% for the year, the BLS said.

Grocery prices were a sticking point in May, though, economists said. Inflation for food at home rose by 0.3% for the month, after having deflated 0.4% the prior month.

Food prices give “a little bit of a queasy feeling,” Zandi said. It’s one of the categories he’s most concerned about, he said.

Other disinflationary factors

Housing inflation has also moderated, an important element since the category is the largest component of the consumer price index, economists said.

Indeed, monthly inflation for rent and “owners’ equivalent rent” (a rent measure applied to homeowners) have “returned to their pre-pandemic norms,” Stephen Brown, deputy chief North America economist at Capital Economics, wrote in a research note Wednesday.

These trends together signaled “a steady downtrend in inflation” back to the Fed’s long-term target at least by the end of this year or early next year, Oxford Economics’ Yaros said.

Tariff risk ‘stalling out’ disinflation

'Possible' tariff effect is smaller than earlier assumed, says Goldman's David Mericle

There were some early signs of tariff impacts in the May CPI report for people “looking through a microscope,” Brown wrote.

For example, major appliance prices jumped 4.3% for the month, and toy prices by 2.2%, he wrote, citing CPI data.

“Unless all retailers are raising prices at the same time, it may trickle not flood into the data,” Elizabeth Renter, senior economist at NerdWallet, wrote Wednesday.

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