Hong Kong stocks continued their decline on June 11th, with the Hang Seng Tech Index falling over 2%. Major internet companies saw a broad-based pullback. Alibaba-W shares plunged more than 5%, while Xiaomi Group-W and Tencent Holdings dropped over 1%. Meituan-W and Kuaishou-W also followed the downward trend. The Hong Kong Internet ETF Huabao (513770), a core tool for accessing the Hong Kong AI sector, touched a new low for the current correction cycle, with its on-market price currently down 1.63%.
On the news front, five major e-commerce platforms—Taobao (Tmall), JD.com, Pinduoduo, Douyin, and Xiaohongshu—were summoned for talks today. Authorities communicated a second batch of typical issues identified in a comprehensive crackdown on "cutthroat" competition among platforms. The main problems highlighted include false advertising during promotional events, non-standard formulation and disclosure of promotion rules, and failure to disclose information about product sellers. Rectification requirements were issued.
Analysis suggests that the Hong Kong market will still face short-term disturbances from overseas interest rates, exchange rates, geopolitical tensions, and earnings cycles. However, as long as fundamental improvements continue to materialize, there is an opportunity to gradually accumulate medium- to long-term returns amidst the volatility.
Valuations at Historical Lows
It is worth noting that valuations for the Hong Kong internet sector are accelerating their bottoming process. As of June 10th, the CSI Hong Kong Stock Connect Internet Index has fallen over 40% since the correction began on October 3rd, 2025. Its price-to-earnings ratio (TTM) is around 20 times, sitting at a historical low point, specifically at the 5.75th percentile over the past five years. (Note: The index's annual performance over the last five full years is: 2021, -36.61%; 2022, -23.01%; 2023, -24.74%; 2024, 23.04%; 2025, 27.02%. The index composition is adjusted per its rules, and past performance does not indicate future results.)
Institutional Perspectives on Market Outlook
China Merchants Securities believes that negative factors for the Hong Kong market are nearly exhausted, and it is in a structural bottom phase characterized by a "solid floor below, awaiting catalysts above." Short-term upside depends on two key catalysts: AI-driven value reassessment and marginal improvements in corporate earnings. The interim results season in August is seen as a critical verification point.
Soochow Securities states that the Hong Kong market offers clear "odds advantages" and investors should pay attention to the window for catch-up gains. The U.S. stock market's AI rally is spreading from hardware to software and applications, a trend with which Hong Kong stocks could potentially resonate.
Investment Vehicles for Exposure
Investors focusing on the value reassessment of Hong Kong internet leaders amid the AI transformation can consider the Hong Kong Internet ETF Huabao (513770) and its feeder funds (Class A 017125; Class C 017126). This ETF passively tracks the CSI Hong Kong Stock Connect Internet Index. Its top ten holdings concentrate major tech giants like Alibaba-W and Tencent Holdings, alongside AI application companies across various sectors, highlighting significant leadership advantages. It offers intraday T+0 trading with good liquidity.
For those bullish on Hong Kong technology but seeking to reduce volatility, the first-of-its-kind Hong Kong Large Cap 30 ETF Huabao (520560) is another option. It employs a "technology + dividends" barbell strategy. Its major holdings include high-volatility tech stocks like Alibaba as well as stable, high-dividend-paying stocks from sectors like banking and insurance, making it an ideal foundational tool for long-term Hong Kong market allocation.
Important Risk Considerations
Investors are reminded that recent market volatility may be significant, and short-term price movements do not predict future performance. Investment decisions must be made rationally based on individual financial circumstances and risk tolerance, with high attention paid to position sizing and risk management.
The Hong Kong Internet ETF passively tracks the CSI Hong Kong Stock Connect Internet Index. The index's base date is December 30, 2016, and it was officially launched on January 11, 2021. Its constituent stocks are adjusted according to its rules. Index constituents mentioned are for illustrative purposes only and do not constitute any form of investment advice or represent the holdings or trading activities 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 presented is for reference only. Investors are solely responsible for their independent investment decisions. The views, analysis, and forecasts herein do not constitute investment advice of any kind, and no liability is accepted for any direct or indirect losses arising from the use of this content. The performance of other funds managed by the fund manager does not guarantee this fund's performance. Past fund performance is not indicative of future results. Fund investment carries risks and must be approached with caution.
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