BEIJING — Money is flowing into mainland Chinese and Hong Kong stocks in ways not seen since 2018, according to research firm EPFR Global.

Active foreign fund managers put $1.39 billion into mainland Chinese stocks in the four weeks ended Jan. 25, EPFR data showed. Active fund inflows into Hong Kong stocks were even greater during that time, at $2.16 billion.

"Active managers have never been this positive toward China markets in the past five years," said Steven Shen, manager of quantitative strategies at EPFR.

"In the very short term we should be expecting more inflows from the active managers," he said, pointing to factors such as China's reopening from zero-Covid. EPFR says it tracks fund flows across $46 trillion in assets worldwide.

Active money managers are more involved with picking portfolio investments, while passive money managers tend to follow stock indexes.

The Shanghai composite gained more than 5% in January, the most since a surge of nearly 9% in November, according to Wind Information. The Hang Seng Index climbed by more than 10% in January, a third-straight month of gains.

The money is coming in faster than it did in early 2022, Shen said. At the time, a few institutional investors had said it was time to buy Chinese stocks due to Beijing's emphasis on stability in a politically important year.

Back then, local investors had been more cautious. The highly transmissible omicron variant and China's zero-Covid policy subsequently locked down the city of Shanghai for two months, while constraining business activity in much of the country. In 2022, GDP grew by 3%, one of the slowest paces in decades.

China abruptly ended its increasingly stringent Covid controls in December. Tourism, including travel abroad, rebounded during the Lunar New Year in late January.

This year, local investor sentiment is also recovering.

"With the macro environment in China I think 2023 we're going to see a lot more [mainland China] client money shifting back into the market, into the secondary market funds," Lawrence Lok, chief financial officer of wealth management firm Hywin, said in early January. The secondary market refers to the public stock market.

Lok said those clients last year avoided taking risk due to the turbulent market. The Shanghai and Hong Kong stock indexes plunged more than 15% last year.

For Hywin's clients with funds outside of China, Lok said they are looking for ways to invest in U.S.-listed Chinese companies or Hong Kong stocks, among other offshore funds.

Hywin had more than 40,000 active clients as of June 2022 and 4.5 billion yuan ($642.9 million) in assets under management.

While real estate and renewable energy-related sectors are seeing interest, tech has been relatively quiet, EPFR's Shen said. He said inflows were also less aggressive when it came to U.S.-listed Chinese stocks.

For passive money managers, cumulative net inflows into mainland Chinese, Hong Kong and U.S.-listed stocks stands at $7.05 billion for the four weeks ended Jan. 25, according to EPFR.

U.S.-based money managers who invest for the longer term bought a net $1.3 billion of U.S.-listed Chinese stocks last month as of Jan. 25 — the second-straight month of such inflows, according to Morgan Stanley.

"U.S.-based long-only managers shared that they just started to reduce their underweights on China, or were in discussion with investors to release mandate constraints on China exposure," Morgan Stanley analysts said. "They expect inflows from asset owners to accelerate in 2Q23."

Pinduoduo, Baidu and Bilibili were among the U.S.-listed Chinese stocks that saw the largest inflows, the report showed.

However, Bernstein analysts cautioned Chinese stock gains might not run much further if U.S. active investors — who have sat out the rally — and local investors don't buy in.

The "extreme" inflows of the past three months threaten whether the market rally can continue for the next three months, Bernstein analysts said in a Jan. 27 report. "We believe in the short term, investors need to be more selective while picking China exposure."

Recent enthusiasm about Chinese stocks also follows a rocky two years in which the abrupt suspension of Ant Group's IPO, a crackdown on tech and real estate businesses and stringent Covid controls weighed on sentiment.

Bruce Liu, CEO of Esoterica Capital, said in January that while he's been talking with some affluent Chinese about global diversification since 2019, they didn't really start to act until the second half of last year. His firm manages under $50 million in assets.

"What happened in the past two years, that left a scar on their mind," Liu said. "It's a matter of confidence. I don't see that confidence coming back yet. At least the people I have been talking to."

"This is a strategic decision from their perspective," he said. "Maybe they have enough Chinese assets. It's more important for them to diversify [globally] rather than take advantage of this current, ongoing coming back."

The China reopening story isn't just for capital. Now that the borders are open, some in the investing business are even physically coming into the country.

Taylor Ogan, CEO of Snow Bull Capital, moved with his team of three to Shenzhen, China, in January to open a research office.

"The more we looked at it, we need to be in China simply just for research," Ogan said. He said many Chinese companies don't have much English-language material even if they are listed in Hong Kong, and that some giant Chinese public companies told them they hadn't had any foreign analysts visit them since the pandemic.

"We started seeing that as an opportunity."

— CNBC's Michael Bloom contributed to this report.