Hong Kong’s Hang Seng index is heading towards a technical bull market phase, with the city stocks continuing their remarkable rebound for the month. This surge has been driven by significant inflows from overseas, contributing to a renewed sense of optimism in the market.

The Hang Seng index surged by up to 1.7% pushing its gains since January to over 20%. If this trend continues by closing, the index will officially enter a bull market, joining several other indexes in China and Hong Kong that have achieved the same milestone in the past few weeks.

This month, Hong Kong stocks have emerged as top performers worldwide, driven by robust inflows from mainland Chinese investors. Some strategists suggest that these investors seek to diversify their currency exposure amidst ongoing depreciation pressure on the Chinese Yuan.

Furthermore, there are indications that foreign funds are rotating money away from pricey technology stocks in the US and other markets, and instead investing in Chinese internet companies, which hold significant weight on Hong Kong’s equity benchmark.

Kelvin Wong, an Oanda Asia Pacific Pte market analyst, suggested, “I suspect it is likely due to profit-taking after consecutive sessions of daily positive gains.” He also noted that traders might have scaled back their activity in anticipation of the release of China’s factory data on Tuesday.

At this time of writing, the Hang Seng index is up by 0.54%, trading at 17,746.91 while the Nikkei 225 is up by 0.81% trading at 37,934.76.

The Shanghai Composite also rose by 0.79%, trading at 3,113.04 as well as the South Korea’s Kospi which is 1.77% higher, trading at 2,687.44. India’s Nifty also went up by 1%, trading at 22,643.4.

In Australia, the S&P/ASX 200 is up by 0.81%, trading at 7,637.4.