Chinese concept stocks posted gains for the second consecutive day overnight, with the Nasdaq Golden Dragon China Index closing up 2.08%. Exceptional earnings results drove Tencent's ADR surge of 7.4%, reaching a new four-year high and pushing the company's total market capitalization to $700 billion.
On August 14, Hong Kong stocks continued their upward momentum in early trading, with Tencent Holding opening 2.39% higher and breaking above HK$600. Bilibili-W, Meituan-W, and Kuaishou-W followed suit with gains. The Hong Kong Internet ETF (513770), which heavily weights Hong Kong internet leaders, gapped higher at the open with intraday gains reaching 1.7%, currently trading up 0.86%.
According to Tencent's announcement, second-quarter revenue reached 184.5 billion yuan, up 15% year-over-year, beating the estimated 178.94 billion yuan. Second-quarter net profit came in at 55.63 billion yuan, up 17% year-over-year, significantly exceeding expectations of 50.83 billion yuan.
Additionally, signals for a Federal Reserve rate cut in September continue to emerge. The previously released CPI inflation report came in below expectations, boosting rate cut expectations. Treasury Secretary Yellen recently stated that given the recent weakness in employment data, the Fed could potentially cut rates by 50 basis points in September.
CME Group's FedWatch tool calculates a 0% probability that the Fed will keep rates unchanged in September, a 93.3% probability of a 25 basis point cut, and a 6.7% probability of a 50 basis point cut.
Goldman Sachs recently forecasted that the Fed will cut rates by 25 basis points each in September, October, and December this year, totaling three rate cuts.
Hong Kong stocks are positioned to be one of the main beneficiaries of the Fed's easing cycle, particularly in the technology sector which is sensitive to liquidity conditions.
The Hong Kong Internet ETF (513770) and its feeder funds (Class A 017125; Class C 017126) passively track the CSI Hong Kong Connect Internet Index, becoming core Hong Kong AI investment vehicles through heavy weighting in Hong Kong internet leaders. Data shows that from the beginning of the year through the end of July, the CSI Hong Kong Connect Internet Index accumulated gains of over 35%, significantly outperforming the Hang Seng Tech Index during the same period, demonstrating outstanding upside momentum.
According to the fund's second-quarter report, as of the end of Q2, the Hong Kong Internet ETF (513770) held Xiaomi Group-W, Tencent Holding, Alibaba-W, and Meituan-W as its top four holdings, with a combined weight of 54.74%. The top ten holdings accounted for over 72% of the total weight.
As of the end of July, the Hong Kong Internet ETF (513770) recorded an average daily trading volume of 593 million yuan year-to-date, supports intraday T+0 trading, is not subject to QDII quota restrictions, and offers excellent liquidity! Reminder: Recent market volatility may be significant, and short-term gains or losses do not indicate future performance. Investors must make rational investment decisions based on their financial situation and risk tolerance, paying close attention to position sizing and risk management.
Data source: Shanghai and Shenzhen Stock Exchanges, etc. Note: The CSI Hong Kong Connect Internet Index posted the following annual returns in the past 5 complete years: 2020: 109.31%; 2021: -36.61%; 2022: -23.01%; 2023: -24.74%; 2024: 23.04%. Index constituent adjustments are made according to index compilation rules, and historical backtesting performance does not predict future index performance.
Risk Warning: The Hong Kong Internet ETF passively tracks the CSI Hong Kong Connect Internet Index, which has a base date of December 30, 2016, and was published on January 11, 2021. Index constituents are adjusted according to index compilation rules. Individual stocks mentioned in this article are for display purposes only and do not constitute investment advice of any form, nor do they represent holdings information or trading activities of any funds managed by the fund manager. The fund manager assesses this fund's risk level as R4 - Medium-High Risk, suitable for aggressive (C4) and above investors. Any information appearing in this article (including but not limited to individual stocks, comments, forecasts, charts, indicators, theories, any form of expression, etc.) is for reference only, and investors must take responsibility for any independent investment decisions. Furthermore, any views, analyses, and forecasts in this article do not constitute investment advice of any form to readers, nor do they bear any responsibility for direct or indirect losses arising from the use of this article's content. Performance of other funds managed by the fund manager does not guarantee this fund's performance, past performance does not represent future results, fund investment carries risks, and fund investment should be approached with caution.
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