Global markets have faced significant headwinds since July, with persistent geopolitical tensions and elevated US Treasury yields triggering a pullback in the previously red-hot computing hardware sector. These combined factors have weighed on global risk assets. However, the Hong Kong tech sector has carved out a relatively independent recovery path, driven by its own attractive valuation discount, a revaluation of AI commercialization potential within internet platforms, and a global portfolio rebalancing trend. This has boosted interest in related investment products, such as the popular Hang Seng Tech ETF Huatai-PineBridge (513130).
The fund has recorded an average daily turnover of 4.654 billion yuan year-to-date, making it the only ETF tracking the Hang Seng Tech Index on the A-share market to surpass the 4.5 billion yuan daily average threshold. Its latest asset size has reached 34.215 billion yuan, highlighting its superior liquidity. On a fundamental level, the market's valuation criteria for the AI supply chain appear to be shifting. Previously, capital focused heavily on companies' capital expenditure on computing hardware. Now, the investment approach is more pragmatic, emphasizing real revenue from industrial applications. The focus is on whether companies can leverage their computing resources to generate stable, long-term income and deliver positive cash flow.
Why does this revaluation matter for Hong Kong tech?
According to recent earnings reports from the four major North American cloud service providers for the second quarter of 2026, their combined capital expenditure has expanded from $39.6 billion in Q1 2024 to $151.4 billion in Q2 2026, a staggering 282% increase. This massive investment is backed by strong market demand. The four companies' total backlog of unfilled orders stands at $2.33 trillion, an 188% jump from $809 billion in the same period last year. The simultaneous rise in cloud revenue and order backlogs improves the visibility of future income, helping to alleviate concerns that the huge capital spending lacks underlying demand support. While overseas demand remains robust, AI innovation and commercialization in China are also accelerating. Local large language models (LLMs) and computing infrastructure continue to be deployed. On August 3, a leading domestic internet company launched a new foundational LLM, Qwen3.8, with 2.4 trillion parameters. It offers significant performance improvements in code generation and professional office tasks, ranking second globally in the authoritative Arena benchmark. On August 4, the international AI aggregation platform OpenRouter released weekly data showing that the domestic model DeepSeek-V4-Flash topped global usage with 7.22 trillion tokens called in a single week, marking a substantial breakthrough in both R&D strength and market application for local AI technology.
Valuation support and capital inflows
Furthermore, dual support from valuation and capital flows is expected to strengthen the allocation appeal of the Hong Kong tech sector. After a period of sustained adjustment, the Hang Seng Tech Index's latest price-to-earnings (P/E) ratio has fallen to 23.66 times, placing it in the 40th percentile range since its inception. This suggests potential for valuation recovery. On the capital flow front, aside from a brief outflow in May, southbound capital has maintained a steady pace of allocation to Hong Kong stocks throughout the year. In June and July, net buying surged to 27.111 billion Hong Kong dollars and 62.869 billion Hong Kong dollars, respectively. In July alone, southbound net inflows into the Hong Kong information technology sector reached 40.8 billion Hong Kong dollars, ranking first among all industries. The Hang Seng Tech ETF Huatai-PineBridge (520500), which supports T+0 trading, closely tracks the Hang Seng Tech Index. This index is a representative benchmark for the Hong Kong tech sector, comprising core tech companies like Chinese internet platforms, cloud service providers, and AI firms. Its supply chain coverage spans computing infrastructure, AI model capabilities, application scenarios, and commercial monetization, positioning it to benefit significantly from the rapid development of large models.
The Hang Seng Tech ETF Huatai-PineBridge (513130) and its feeder funds (A-share: 015310 / C-share: 015311) are managed by Huatai-PineBridge Fund, one of the earliest ETF managers in China. With over 19 years of experience in index investing, the firm has created tools like the CSI 300 ETF Huatai-PineBridge (510300) and the A500 ETF Huatai-PineBridge (563360), known for their transparent holdings, convenient trading, and low fees. As of the end of June 2026, the company's ETFs have generated over 180.6 billion yuan in cumulative profits for its holders over the past two years, making it one of only three public fund companies in the A-share market to achieve cumulative profits exceeding 160 billion yuan.
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