On November 5, the Hang Seng Tech Index opened 1.43% higher and quickly strengthened, with gains expanding to 3.88% within nine minutes of the open, touching 4,089.29 points, while early-session turnover reached HK$11.588 billion.
The Hang Seng Index also surged 2.21% to 24,448.14 points, with main board turnover recording HK$41.666 billion.
As of press time, NetEase jumped 7%, Trip.com rose 6%, while Meituan, Alibaba and Bilibili gained 5%. Tencent, Xiaomi and Kuaishou followed with 4% gains, and Baidu and JD.com recorded 3% increases. Alibaba opened just 2.58% higher but quickly chased up to 5% within half an hour, making it the most elastic heavyweight stock on the board.
The leaders topping the gainers list were not limited to traditional heavyweight names, as AI application concept stock Mobvista surged 12% to lead the entire market. The gold sector continued its previous rebound, with Zijin Gold International rising 7%, while the innovative drug sector also strengthened in tandem, as BeiGene and WuXi AppTec recorded gains of 2.76% and 2.93% respectively.
Meanwhile, storage semiconductors, optical communications and PCB sectors collectively encountered a pullback, with CSOP's two-times long product tracking SK Hynix plunging 15%, and the three major oil companies weakening across the board.
Overnight external markets provided a mildly supportive backdrop for Hong Kong stocks, as the Dow closed up 3.03%, the Nasdaq gained 1.44%, the VIX panic index fell sharply by 20.26% to 16.61, and December-delivery WTI crude settled down 8.29%, with geopolitical risk aversion and energy costs declining simultaneously.
The underlying logic supporting this round of Hong Kong stock rebound still lies in extremely compressed valuation levels. According to calculations by China Securities, as of October 25, the forward price-to-earnings ratio of the Hang Seng Tech Index was approximately 14.5 times, sitting at the 7th percentile of its historical range. This valuation level has retreated about 75% from the historical peak of 50 to 60 times in early 2021, falling back to the bottom zone seen between August and September 2024. Core companies collectively account for nearly 80% of the index weight, and after a prolonged adjustment, any minor marginal improvement will be significantly amplified on the board.
Market technical indicators show that oversold conditions constitute another hard condition supporting the rebound. According to CICC statistics, as of October 30, the sentiment indicator of the Hang Seng Tech Index had dropped to negative 0.95, at the 2nd percentile since 2021, completely breaking below the dynamic panic trigger line of negative 0.82. Only 13.33% of constituent stocks stood above their 50-day moving average, and the 20-day bias rate dropped to negative 6.59%.
The flow of off-market funds has also begun to show a substantial reversal, as of midday November 3, southbound capital recorded intraday net inflows into Hong Kong stocks exceeding HK$12 billion, breaking the previous streak of 14 consecutive trading days of sustained net outflows. For the entire month of October, southbound capital accumulated net selling of approximately HK$27.951 billion, with net outflows reaching HK$11.036 billion during the week of October 26 to 30, with selling pressure highly concentrated during the accelerated decline in late October.
A major reform of index compilation rules constitutes another clue for medium-term fund repositioning. Hang Seng Indexes Company officially published the summary of compilation methodology revisions on October 7, expanding the number of constituent stocks from 30 to 50, abolishing the original five-industry restriction, and adding two threshold requirements for liquidity and revenue. The timeline for the new constituent list has been determined, to be officially announced after market close on November 20 and effective on December 7, with passively allocated funds needing to complete repositioning within the following two weeks. According to China Securities' simulation based on the September 30 benchmark date, all existing 30 constituent stocks would be retained, with the 20 new additions carrying a combined weight of approximately 9.74%.
The spatial shifts in sector weights clearly point to the direction of industrial structure iteration, with internet platforms' weight ratio passively diluted from 55.13% to 51.21%, semiconductors, computing power and advanced hardware rising from 18.05% to 20.94%, and the combined weight of AI-related industry chains increasing from 19.92% to 23.36%. This adjustment marks the Hang Seng Tech Index's accelerating evolution from a single internet platform index to an all-category technology index.
Institutional analysis points out that Hong Kong stock valuations have clearly retreated and risks have been relatively fully released, with marginal suppression from overseas long-end interest rates on the denominator side expected to weaken, but the numerator side still requires observation of the sustainability of AI capital expenditure and actual realization of industry chain profits. This round of rally is more like a pure odds-based value repair, and the medium-term stabilization and recovery of the market still requires waiting for substantive fiscal policy support for households, as well as fundamental improvement in balance sheets and credit cycles.
These macro variables will ultimately be directly reflected in the income statements of platform companies, but the pace of their implementation still requires waiting for the formal introduction of relevant policies. Placing the day's moderate gains back on the long-cycle curve, the current market level remains at a relative bottom. The Hang Seng Tech Index is still down 26.33% year-to-date, though it has accumulated gains of 9.13% since last Friday, achieving a rare five consecutive daily gains. The gains are essentially still repairing extreme valuations and excessively pessimistic sentiment, and a true fundamental narrative revaluation still requires patience.
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