The price gap between mainland China stocks and their counterparts listed in Hong Kong is poised to reach a more than four-year low, as optimism in artificial intelligence drives investors to the city’s market.

A measure of onshore shares’ premium to their Hong Kong peers is close to surpassing an October-low, bringing it near the lowest level since June 2020. This comes as a gauge of Chinese firms listed in Hong Kong surged 24% this year, while the mainland benchmark CSI 300 Index only gained 1.5%.

Tech giants listed in Hong Kong are benefiting from a DeepSeek-driven rally, while sentiment toward onshore shares remained capped by a soft economic recovery. The financial hub’s outperformance is also helped by strong buying from mainland investors.

To be sure, Beijing’s plans to boost consumption may trigger a reversal of the trend. After months of mostly outflows, a $2.5 billion exchange-traded fund tracking the largest and most liquid stocks in mainland China saw its biggest inflow this week since October.

In the longer term, the premium “could be lower than in the past due to increasing southbound ownership in Hong Kong, which is now at a similar level compared to foreign active funds’ ownership,” UBS Group AG strategists including James Wang wrote in a note. Some level of premium should remain given the higher liquidity and turnover in Hong Kong, as well as the lack of ability to short onshore shares, they said.