As the year draws to a close, Hong Kong stocks have undergone a notable adjustment, showing signs of renewed momentum. Now may be the time to revisit strategies for bottom-fishing in this market.
Hong Kong stocks have been a frequent topic of discussion, with many maintaining a bullish outlook. A recent visit to Hong Kong revealed a bustling atmosphere—hotel prices in Central have risen significantly, and restaurants were fully booked well in advance. This vibrancy may reflect the market's activity, with numerous IPOs heading to Hong Kong.
Despite recent corrections, such volatility is characteristic of Hong Kong's offshore market. Historically, the market experiences rapid surges followed by periods of consolidation. For investors, the key is to position early rather than chase rallies—a fundamental rule for navigating Hong Kong stocks.
This year, the Hang Seng Tech Index has seen two major waves: the first from January to March, and the second from April to early October. Notably, Hong Kong stocks rebounded earlier than A-shares last year.
From a liquidity and global market perspective, the outlook has become clearer following the Fed's rate-cut decision. Concerns over an AI bubble in U.S. stocks have also eased, and the Bank of Japan's potential rate hike decision this week will further clarify the landscape.
**1. Internet Sector: A Consensus Play for Northbound and Foreign Capital** Hong Kong's internet giants remain a focal point for both mainland and international investors, given their scale, liquidity, and dominance in the new economy. ETFs like the HK Internet ETF (513770) track the CSI Hong Kong Stock Connect Internet Index, which has outperformed the Hang Seng Tech Index this year (up 31.74% YTD as of Dec. 12). Top holdings include Alibaba and Tencent (25% combined weight), followed by Xiaomi, Meituan, JD Health, SenseTime, Bilibili, Ali Health, and Kuaishou. The index trades at a P/E of 24.95x, near historic lows (27.34% percentile).
**2. Biotech Innovation: A High-Growth Niche** Biotech, particularly innovative drugmakers, is another hotspot. The Hang Seng HK Stock Connect Innovative Pharma Select Index (tracked by ETF 520880) has surged 80.79% YTD, excluding CXO firms. For broader exposure, the HK Stock Connect Healthcare ETF (159137, launching Dec. 15) covers internet healthcare, AI-medicine, and other novel segments, with a P/E of 27.19x (25.42% percentile).
**3. Hard Tech: Semiconductors, Robotics, and Smart Driving** Investors seeking cutting-edge tech can consider the HK Information Technology ETF (159131), which focuses on semiconductors (e.g., SMIC at 20.48% weight) and robotics. For autonomous driving, the HK Auto 50 ETF (520780) tracks EV leaders like XPeng, Li Auto, BYD, and Geely (45% combined weight), alongside smart-driving component suppliers.
**4. Stable Core Holdings: Blue-Chips and Dividend Plays** For lower-risk allocations, the HK Large-Cap 30 ETF (520560) blends tech and high-dividend stocks (up 27.59% YTD), while the HK Stock Connect Dividend ETF (159220) targets low-volatility yield strategies.
In summary, a balanced portfolio could combine stable core ETFs with high-growth sector bets. The table below summarizes key HK ETFs for reference (index returns used for most newly launched products).
*Data Source: Wind, as of Dec. 12, 2025* *Disclaimer: Views expressed are personal and not investment advice. Market conditions may change. Past performance does not guarantee future results. Investing involves risks.*
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