Southern Hang Seng Tech ETF Surges Over 3% as Citigroup Flags Attractive Valuations for Internet Stocks

Stock News06-29

The SOUTHERN HENDERSON TECHNOLOGY EXCHANGE-TRADED OPEN-END INDEX SECURITIES INVESTMENT FUND (QDII) (520570) has risen nearly 4%. As of writing, it is up 3.51%, trading at 0.708 yuan with a turnover of 87.23 million yuan.

Market Drivers and Catalysts

On June 29, the majority of Hong Kong-listed technology and internet stocks strengthened, driving the Hang Seng Tech Index to surge over 4% during the session. Several individual stocks provided specific catalysts. NetEase is set to become a dual-primary listed company tomorrow, a significant prerequisite for inclusion in the Stock Connect program. Regarding Baidu, reports suggest its chip unit Kunlunxin is targeting a Hong Kong listing with an estimated valuation of around $50 billion.

Analyst Perspective on Valuations

A research report from Citigroup indicates that valuations for China's internet sector are approaching a bottom. The report states that even under stress tests assuming potential earnings downgrades of 10% to 30, valuations after deducting cash remain highly attractive. Companies with strong core businesses and robust cash flow generation capabilities are positioned to navigate through this cycle.

ETF Overview

The Southern Hang Seng Tech ETF (520570; with feeder fund classes A: 020988 and C: 020989) closely tracks the Hang Seng Tech Index. The index covers 30 large-cap, highly liquid technology companies listed in Hong Kong, making the ETF a key instrument for capturing trends in the Hong Kong tech sector. The index's top ten constituent stocks by weight are SMIC, NetEase-S, Tencent Holdings, Meituan-W, BYD Company, Xiaomi Corporation-W, Alibaba-W, Lenovo Group, JD.com-SW, and Hua Hong Grace.

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