Chinese investors are pulling money from Hong Kong stocks at an unprecedented pace, with mainland-listed ETFs focused on Hong Kong equities seeing 25 billion yuan ($3.7 billion) in outflows last week. This marks the largest weekly total on record and reverses last year's steady inflows as investors shift toward mainland semiconductors and AI-linked shares.

Goldman Sachs downgraded H shares to market-weight, citing rising opportunity costs as mainland AI investments gain appeal. Even after Tencent's H-shares jumped 10% following AI progress reports, investors sold HK$2.1 billion ($268 million) worth of shares, demonstrating waning confidence despite short-term rallies.

The exodus continues as the Hang Seng Tech Index climbs 4.7%, with ETFs tracking the gauge seeing record withdrawals of about 1 billion yuan. Goldman now suggests approaching Hong Kong through targeted stock ideas rather than broad market exposure.