Leading Hong Kong-listed internet stocks strengthened during the morning session on July 16th.Alibaba-W surged by more than 5% at one point and is currently up nearly 4%, while Kuaishou-W gained over 5%. Xiaomi Group-W rose more than 4%, Meituan-W increased by over 3%, and TENCENT advanced more than 2%. Additionally, My Freightworld Technologies, Inc. skyrocketed by 24%, with an announcement indicating expected first-half revenue of 18.58 to 20.54 billion yuan, a year-on-year increase of 100% to 121%. Its AI application business revenue is projected to be 10.68 to 11.80 billion yuan, surging 112% to 134%.
The Hong Kong Internet ETF Huabao (513770), heavily weighted in these leading internet stocks, opened higher and continued to gain, with its on-market price rising over 4% at one point. It is currently up 3.58%, aiming for consecutive positive sessions.
Key Catalysts Behind the Rally
On the news front, Alibaba's AI model, Qwen, will be integrated into Apple Intelligence, bringing smart features to Chinese users on iOS, iPadOS, macOS, and visionOS. Users can directly experience Qwen's capabilities in text and image understanding, content generation, and more on Apple devices without switching between apps.
Recently, North American cloud providers like META and Amazon have seen their stock prices rebound continuously, indicating a shift in the AI narrative from hardware equipment towards cloud service providers. Morgan Stanley points out that the potential AI revenue opportunity for cloud providers is far from being fully priced in by the market.
Analysts Weigh In on Market Dynamics
Goldman Sachs notes that the current divergence in valuations between A-shares and H-shares in the tech sector has reached a historical extreme, suggesting a gradual increase in holdings of large Hong Kong-listed internet companies. The core logic is that Hong Kong internet stocks are expected to narrow the gap with A-share hard tech stocks across multiple dimensions, including fundamentals, valuation, and liquidity. Hong Kong's internet giants are at a critical juncture for profit recovery, with three key variables to watch: the extent of narrowing subsidy losses, the incremental revenue contribution from new businesses like cloud services and AI agents, and the stability of cash flow from traditional e-commerce. The performance of leading Hong Kong internet stocks is expected to improve in the coming months, with larger-cap leading tech and internet stocks having entered a watch zone, as compressed valuations possess inherent rebound potential.
Focus on AI-Driven Revaluation
Attention is turning to the potential revaluation of leading Hong Kong internet stocks under the AI transformation. The Hong Kong Internet ETF Huabao (513770) and its feeder funds (Class A 017125; Class C 017126) passively track the CSI Hong Kong Stock Connect Internet Index. Its top ten holdings aggregate tech giants like Alibaba-W and TENCENT, along with AI application companies across various sectors, showcasing significant leadership advantages. The ETF offers intraday T+0 trading with good liquidity.
Alternative Strategy for Balanced Exposure
For those bullish on Hong Kong tech but seeking to reduce volatility, consider the market's first product of its kind—the Hong Kong Large Cap 30 ETF Huabao (520560). It employs a "tech + dividends" barbell strategy, with heavy positions in high-growth tech stocks like Alibaba and also encompassing stable, high-dividend stocks from banks and insurers, making it an ideal long-term core holding for Hong Kong market allocation.
Important Market and Investment Considerations
Investors are reminded that recent market volatility may be elevated, and short-term price movements are not indicative of future performance. It is essential to invest rationally based on one's own financial situation and risk tolerance, paying close attention to position sizing and risk management.
The CSI Hong Kong Stock Connect Internet Index, with a base date of December 30, 2016, and launch date of January 11, 2021, adjusts its constituent stocks according to its rules; its backtested historical performance does not predict future results. The index's performance over the last five full years shows significant fluctuations, and its volatility has varied considerably year-to-year.
Regarding ETF fees, agents may charge a commission not exceeding 0.5% for subscriptions or redemptions, which includes fees charged by exchanges and registration institutions. For the feeder funds, Class A shares have a front-end load structure, while Class C shares do not charge a subscription fee but have a sales service fee of 0.3%. Redemption fees for both classes apply for holdings under 7 days.
Final Risk Advisory
The Hong Kong Internet ETF Huabao and its feeder funds passively track the aforementioned index. Constituent stocks mentioned are for illustrative purposes only; individual stock descriptions are not investment advice and do not represent the holdings or trading动向 of 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 herein is for reference only, and investors are responsible for their own investment decisions. The views, analysis, and forecasts do not constitute investment advice, and no liability is accepted for any direct or indirect losses arising from the use of this content. The past performance of other funds managed by the manager does not guarantee this fund's future results. Fund investment carries risks and requires careful consideration.
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