On Wednesday, Chinese investors significantly decreased their holdings of Hong Kong equities, selling a near-record $2.3 billion worth of shares. This move follows reports suggesting the US and China could begin trade policy negotiations and potentially lower tariffs. Data from Bloomberg shows a record outflow of HK$18.1 billion ($2.3 billion) through the southbound Stock Connect program, the second-largest single-day selloff on record. While this withdrawal was significant, it did not impact the Hang Seng China Enterprises Index, which rose 2.3% before market close. The latest sell-off is likely a profit-taking move following strong inflows in April and easing concerns about trade tensions. Despite these shifts, mutual funds on the mainland remain bullish on Hong Kong-listed companies, with eight prominent firms from the region appearing in the top 50 holdings of mainland mutual funds.