Because Hong Kong is in the south of China, the capital flowing into China stock market from Hong Kong is called "northbound capital". On the contrary, the capital flowing into Hong Kong from Chinese mainland is called "southbound capital".

Generally speaking, we call "northbound capital" smart capital, because northbound capital in a broad sense includes Hong Kong and international capital, and we also call it "foreign capital". They have wider access to information, are more sensitive to the market, and can buy low and sell high. Therefore, more and more people regard northbound capital as one of the important reference indicators for market decision-making.

For example, when the capital inflow to the north is relatively large, it shows that foreign capital is optimistic about the China market, which is a good signal; On the contrary, the large outflow of foreign capital shows that it is not optimistic;

Three Ways for Foreign Capital to Enter China Market

1, QFII (QFII system established by qualified foreign institutional investors to guide and restrict the entry of foreign capital to adapt to the development of domestic economy and securities market, control the influence of foreign capital on domestic economic independence, and curb the impact of overseas speculative hot money on domestic economy. This system requires foreign investors to meet certain conditions in order to enter a country's securities market and obtain the approval of the relevant departments of the country.

2.RQFII (RMB qualified foreign institutional investment)

Foreign capital first converts US dollars into RMB, and then invests in China with local currency; This method will not affect the risk of RMB exchange rate stability;

3. The Hong Kong Stock Exchange allows foreign investment, so foreign investment can pass through the Hong Kong Stock Exchange and then flow into Ada from Shanghai Stock Connect and Shenzhen Stock Connect.

Investment is risky, so be cautious when entering the market.