The beginning of 2026 has witnessed the first southbound shareholding disclosure by public funds, strategically placed within the digital entertainment sector. Amid dual demands for both defensive and offensive positioning, the digital entertainment track—boasting attributes of both consumer recovery and AI technology, allowing it to thrive across two major investment themes—is rapidly becoming a new favorite for fund managers' portfolio allocations. Simultaneously, targets within this sector can meet the contractual requirements of various fund categories, creating a unique logic for capital resonance and establishing itself as a key deployment area for public funds in the Hong Kong stock market at the start of the year.
Leading public funds have disclosed significant stakes, clearly targeting digital entertainment. The latest data disclosed by the Hong Kong Stock Exchange on the evening of January 27 shows that Fullgoal Fund Management Co., Ltd. increased its holding in MEITU by 5.829 million shares on January 23, at an average price of HK$8.2899 per share, with a total investment of approximately HK$48.3218 million. Following this purchase, Fullgoal Fund's total shareholding in MEITU reached 234 million shares, raising its ownership percentage to 5.11%.
Based on data from public fund fourth-quarter reports for 2025, a total of eight funds across the market had included MEITU in their top ten heavyweight holdings by the end of December 2025. These included prominent public fund houses such as GF Fund, China Merchants Fund, SYWG BNP Paribas Asset Management, and SPDB AXA General Insurance. Notably, the GF Shanghai-Hong Kong-Shenzhen Selected Mixed Fund, managed by fund manager Guan Fuqin, had already begun increasing its allocation to the digital entertainment and digital economy sectors by the end of 2025, with MEITU newly entering the fund's list of top ten holdings.
It is noteworthy that none of the eight funds heavily invested in MEITU were products under Fullgoal Fund, indicating that Fullgoal's recent stake disclosure likely represents a brand-new strategic deployment in the Hong Kong Kong stock market for 2026. Furthermore, industry analysts suggest that, given the large number of products under Fullgoal Fund's management, it is possible the firm adopted a "stealth heavy holding" strategy for MEITU, distributing the position across multiple fund products to complete its allocation in the target.
Publicly disclosed stake purchases typically target companies with strong sector growth trends, reasonable revenue scale, and good liquidity, often focusing on stable, growth-oriented blue-chip performers. Since the liquidity in the Hong Kong stock market began to improve significantly in 2025, the interest of public funds in southbound stake disclosures has gradually increased, with institutions like Ruifeng Fund and E Fund having executed multiple such operations in Hong Kong stocks.
The digital entertainment sector's ability to "thrive in any situation" is attracting resonant capital flows from public funds. In the annual portfolio rotation at the beginning of the year, the digital entertainment track, with its versatile characteristics, satisfies fund managers' dual needs for defense and offense while also aligning with the contractual mandates of various industry-specific funds. Compared to the hard tech sector, digital entertainment possesses a unique ability to attract synergistic capital flows, with its core advantage lying in the叠加 of dual attributes.
On one hand, the sector exhibits typical consumer stock characteristics, aligning with the current market theme of consumption recovery. On the other hand, companies within the digital entertainment sector have widely and deeply embraced or developed in-house AI artificial intelligence technologies, precisely hitting the core theme of AI industry development, thereby enabling multi-theme resonance across both the consumption recovery and AI investment narratives. Concurrently, the overall valuation level of the digital entertainment sector remains relatively low, a feature that has attracted incremental buying from public fund products against the backdrop of capital rotation from high to low valuations.
A fund manager in Shenzhen indicated that digital entertainment targets typically meet the contractual requirements of various fund product mandates; they can serve as heavyweight holdings for consumer sector funds and also fall within the investment scope of technology-themed funds. Such targets enjoy better liquidity coverage from incremental capital. The person also pointed out that a more potent manifestation of consumption recovery is likely to be in the digital entertainment field, driven by AI technology. Furthermore, digital entertainment highly aligns with public funds' allocation preferences for spiritual and emotional consumption within the broader consumer sector.
The market performance of the digital entertainment sector since the start of 2026 has confirmed its appeal, with related stocks showing sharp upward trends. For instance, Bilibili, heavily held by Ping An Fund, Great Wall Fund, and Harvest Fund, has seen its price surge nearly 40% since the beginning of the year, with its market capitalization breaking through HK$110 billion to reach a nearly four-year high since March 2022. Additionally, leading public fund managers like GF Fund, Southern Fund, China Asset Management, Zhong Ou Fund, and Yongwin Fund have also set their sights on other digital entertainment companies such as Damai Entertainment, Chizicheng Technology, Heartbeat Company, and Tanwan.
Chizicheng Technology, identified by Southern Fund, has become a performance benchmark within the sector. The company, which focuses on entertainment live streaming, voice social networking, and short dramas in Middle Eastern and African markets, reported revenue of HK$3.486 billion for mid-2025, a year-on-year increase of nearly 43%, empowered by AI artificial intelligence technologies. Its net profit for the first half of 2025 reached HK$536 million, a substantial year-on-year increase of 122%, vividly demonstrating the sector's robust profit realization capabilities.
Fund managers are optimistic about the future realization potential of digital entertainment. As a sector possessing core data entry point value, digital entertainment is becoming an attractive sub-sector within the AI+ application field, garnering significant attention from fund managers who are generally bullish on its long-term development and value realization space. Huang Wei, manager of the Ping An Rui Xiang Wen Yu Fund, believes that one of the core investment focuses for 2026 is the implementation of Agent applications. The proliferation of this technology is expected to significantly increase user engagement time, subsequently driving rapid growth in computing power demand.
Meanwhile, the penetration of AI applications on the device side is highly anticipated for 2026. While global tech giants refine their large language model capabilities, they will also begin accelerating their efforts to capture application entry points and user data. It is highly likely that more innovative results in AI application deployment on devices will be seen this year. Guan Fuqin, manager of the GF Shanghai-Hong Kong-Shenzhen Selected Mixed Fund, pointed out that internet giants building super-applications and hardware innovation are also important investment directions for 2026.
Advances in Google's Gemini technology indirectly reflect the importance of an ecosystem for model iteration, which serves as an important inspiration for domestic internet giants. In 2026, major players are likely to experiment with interoperability within their ecosystems to drive technological iteration of large models and build their own super-applications. Wen Zhongyang, manager of the China Merchants Culture and Leisure Fund, stated that he has been actively allocating to AI application content, gaming, and other sub-sectors within the media field and has benefited from the rapid development of the AI technology industry cycle.
Looking ahead, uncertainties in the overseas macroeconomic environment are gradually increasing, while the valuation attractiveness of domestic assets is becoming more prominent. Particularly as the AI technology industry cycle continues to develop rapidly, investment opportunities related to digital entertainment are expected to continue to emerge.
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