On the morning of October 13, 2026, weighed down by factors such as sharp declines in overseas markets, Hong Kong stocks continued to fall. The Hang Seng Tech Index hit a new correction low of 4,050 points during intraday trading, approaching the level before the comprehensive rally that began on September 24, 2024 (when it closed at 3,915 points).
Industry insiders believe that Hong Kong stocks have recently been affected by higher overseas interest rates, and some internet giants have invested heavily in the field of artificial intelligence, requiring continuous financing. These factors have dragged down the index's performance. Although the valuation of the Hang Seng Tech Index has returned to a relatively low level, whether it can rise again still depends on policy efforts and breakthroughs in domestic artificial intelligence development.
Down nearly 40% in a year
After peaking at 6,715 points on October 2, 2025, the Hang Seng Tech Index fell continuously for more than a year, dropping to 4,050 points on October 13, with a cumulative decline approaching 40%.
Yu Fenghui, a consultant at the Hong Kong Stock 100 Research Center, told reporters that the Hang Seng Tech Index is approaching its "924" starting point, and pessimistic sentiment has nearly reached its extreme. The first layer of pressure comes from the tightening of overseas liquidity, with the Federal Reserve restarting interest rate hikes and U.S. Treasury yields climbing. The Hong Kong dollar's peg to the U.S. dollar means Hong Kong interest rates must follow, directly raising the discount rate for Hong Kong stock assets. Meanwhile, the Bank of Japan's rate hike triggered the unwinding of yen carry trades, causing funds to withdraw from high-valuation growth stocks in Hong Kong.
The second layer of pressure comes from the funding pressure on internet companies. Alibaba (09988.HK) completed an HK$80 billion rights issue, and Tencent Holdings (00700.HK) issued US$5 billion in offshore bonds. The core investment direction of the financing is AI infrastructure. The market's patience with high investment and extended return cycles is being worn down, and the valuation system previously built around asset-light, high-cash-flow models is being re-examined.
Wen Tianna, CEO of Boda Capital International, told reporters that overseas central banks are raising interest rates. The main factors behind the Hang Seng Tech Index's adjustment include high U.S. Treasury yields putting pressure on growth stock valuations. The current index structure is biased toward internet and e-commerce, with AI hardware accounting for less than 15% of the weight. Over the past year, the Hang Seng Tech Index missed the global AI mainline. At present, internet giants are increasing AI investment, which will suppress cash flow and profit margins in the short term, and the market is worried about extended return cycles.
Liu Gang, an analyst at CICC, said that the AI market trend has shifted from the 2025 mainline of computing chips and cloud vendors to a 2026 landscape dominated by storage, but Hong Kong stocks' lack of hardware sector exposure caused them to miss the technology hardware rally. In addition, leading Hong Kong internet companies, besides being dragged down by consumer demand, also lag behind other large model companies and unlisted companies in AI investment, model research and development, and revenue realization. They lack the momentum after the "DeepSeek moment" in 2025, dragging down overall index performance.
Zhang Qisi, fund manager of the Southern Fund Hang Seng Tech ETF, said that after the Federal Reserve resumed interest rate hikes, the global macro backdrop is not as tight as the market believes. Filtering out various short-term trades over the past year, the market has in fact only continued the "higher for longer" stance of the Powell era, with few new changes. Looking ahead, AI-driven total factor productivity improvements will still sustain U.S. headline GDP growth. The halt in oil price spikes signals declining inflation, and monetary policy in major overseas markets will also move toward stability.
New opportunities may emerge after constituent stock structural reform
On October 7, Hang Seng Indexes Company announced that the number of constituent stocks in the Hang Seng Tech Index will be expanded to 50. According to the latest estimates, the 20 newly added constituents after the adjustment will together account for about 10% of the weight, while the existing 30 constituents will account for about 90%.
Yu Fenghui said that pessimistic sentiment toward the Hang Seng Tech Index has now reached an extreme range. The constituent stock reform is a structural opportunity. The Hang Seng Tech Index will expand to 50 stocks, adding themes in artificial intelligence, robotics and automation, and frontier technology, and introducing a revenue growth stock selection mechanism. This means the index will shift from an "internet platform index" to a "broad technology growth index," which can capture broader technology dividends over the long term, but short-term passive fund rebalancing will bring liquidity shocks.
Wen Tianna said that positive changes come from the index structural reform. After it takes effect in December, the number of constituents will expand from 30 to 50, adding themes such as AI, advanced hardware, and frontier technology, and introducing a dual selection mechanism of "market capitalization + revenue growth." Existing constituent weights will still account for about 90%, but in the medium to long term this will enhance hard-tech representation, reduce dependence on a single track, and is expected to bring new opportunities. The current valuation of the Hang Seng Tech Index is attractive, and the related reform is a substantive positive, with more structural opportunities expected in the market ahead.
Wu Lixian, a strategist at Everbright Securities International, told reporters that the Hang Seng Tech Index has performed weakly over the past period. One reason is the lack of AI heavyweight stocks. Traditional internet companies have not shown obvious growth momentum in their results. Alibaba, Tencent Holdings, and others have successively raised funds in the market, which has also triggered market concerns about their subsequent research and development expenses. With limited market attention to this sector, heavyweight technology stocks have generally performed sluggishly.
The Hang Seng Tech Index will undergo reform, with constituent stocks increasing from 30 to 50. The new index will be more broadly representative and will include some AI concept stocks. The final 10 will be selected from the fastest-growing individual stocks, and profit growth momentum may strengthen somewhat. But from another perspective, the 20 newly added constituents will together carry a weight of only about 10%, while 90% of the weight will still rest on the original heavyweight stocks, so the change may be relatively limited.
Liu Gang said that for Hong Kong stocks to rise again, the core lies in a substantive improvement in the credit cycle, especially the household credit cycle, which was also the key to the 2025 rebound. In the short term, it depends on fiscal efforts (a repeat of the "924 moment"). In addition, whether Hong Kong internet leaders can reproduce a "DeepSeek moment" is also a catalyst worth watching.
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