On December 9, Hong Kong stocks experienced volatility, with the Hang Seng Index and Hang Seng Tech Index closing down 1.29% and 1.9%, respectively. Tech giants led the decline, with Xiaomi Group-W dropping over 3%, Kuaishou-W and Meituan-W falling more than 2%, and Alibaba-W slipping over 1%. Tencent Holdings stabilized in late trading, ending 0.41% lower.
Among popular ETFs, the HK Internet ETF (513770), a core AI-focused tool for Hong Kong stocks, initially dropped 2% near its annual support level before recovering slightly to close 1.09% lower. Meanwhile, the HK Large-Cap 30 ETF (520560), which employs a "tech + dividends" barbell strategy, fell 1.37%. Both ETFs saw significant intraday premiums, indicating strong buying interest on dips.
On December 8 (U.S. time), former President Trump announced approval for Nvidia to deliver its H200 chips to select Chinese clients. Guotai Haitong Securities noted that while this move is unlikely to derail China's long-term domestic substitution goals, it could boost total computing power supply, benefiting cloud service providers (CSPs) and fueling AI application growth for companies like Tencent and Alibaba.
CITIC Securities remains bullish on the internet sector's cyclical recovery and AI-driven upside, highlighting tech giants' dual advantage: they lead in AI innovation while offering defensive stability with strong balance sheets if an AI bubble bursts.
With the Fed's December rate decision looming, markets anticipate a "hawkish cut." Dongwu Securities suggests this could temporarily dampen Hong Kong stocks' rebound but maintains that tech valuations—especially for AI leaders—are attractive, poised for a rally with new catalysts.
Zhongtai Securities added that Hong Kong tech giants, now reasonably valued with enhanced dividends and buybacks, stand to gain from Fed rate cuts and sustained southbound capital inflows, highlighting the sector's undervaluation and earnings potential.
Notably, recent capital inflows have favored these ETFs. Data shows the HK Internet ETF (513770) and HK Large-Cap 30 ETF (520560) attracted net inflows of ¥164 million and ¥35.16 million, respectively. Their indices hold significant weights in Alibaba-W (18.74%/16.74%) and Tencent (14.84%/14.89%).
The HK Internet ETF (513770) and its linked funds (Class A 017125; Class C 017126) track the CSI HK Stock Connect Internet Index, which concentrates over 73% in top AI cloud computing and application firms. With over ¥10 billion in assets and average daily turnover exceeding ¥600 million, it offers liquidity and T+0 trading without QDII quota constraints.
For investors seeking tech exposure with lower volatility, the HK Large-Cap 30 ETF (520560) combines high-growth tech stocks (e.g., Alibaba, Tencent) with stable dividend payers (e.g., China Construction Bank, Ping An), making it an ideal core holding.
Caution: Recent market swings may persist. Short-term performance isn’t indicative of future results. Investors should assess risk tolerance and manage positions prudently.
Source: SSE, SZSE. The CSI HK Stock Connect Internet Index’s past annual returns: 2020: +109.31%; 2021: -36.61%; 2022: -23.01%; 2023: -24.74%; 2024: +23.04%. Index composition adjusts per rules; historical data doesn’t predict future performance.
Risk Disclosure: The HK Internet ETF passively tracks its index (base date: 2016.12.30; launched 2021.1.11). Constituents are for reference only, not investment advice or fund holdings. Rated R4 (high risk) for aggressive investors (C4+). Past performance ≠ future results. Invest with caution.
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