Is Hong Kong's AI Sector in the Buy Zone? Heavy Buying Near Annual Support as HK Internet ETF (513770) Attracts $350M Inflows in a Day; TENCENT Launches New Buyback Wave

Recently, Hong Kong's AI sector has shown volatile movements. The HK Internet ETF (513770), heavily weighted in internet leaders, recorded four consecutive days of declines, briefly testing its annual support level—yet this triggered strong buying interest. Exchange data reveals the ETF saw a massive single-day inflow of CNY 352 million, with a six-day net inflow totaling CNY 584 million.

Analysts suggest the Hong Kong internet sector may be nearing a "bad news exhaustion" phase, showing signs of bottoming out. Key risks—such as U.S.-China trade tensions, overseas liquidity fluctuations, and profit pressures from food delivery competition—have largely been priced in during the recent correction, limiting further downside. This could mark an entry point for long-term investors, with gradual accumulation recommended for those positioning early.

Notably, November saw a fresh buyback wave among Hong Kong internet giants. As of December 11, TENCENT repurchased 18.638 million shares for over HKD 11.4 billion, while Xiaomi bought back 77.6 million shares worth HKD 3.1 billion—ranking as the top two buybacks in the market. These moves signal management's view of undervaluation and confidence in recovery.

Guosen Securities notes the sector's significant November pullback has left valuations of TENCENT, Meituan, and Alibaba at attractive levels, presenting high-probability entry opportunities. The firm recommends increasing allocations to Hong Kong internet stocks.

The sector uniquely aggregates platform tech titans and hard-tech innovators scarce in mainland markets—companies deeply embedded in global AI, cloud computing, smart hardware, and semiconductor supply chains now transitioning from R&D to monetization phases.

The HK Internet ETF (513770) and its feeder funds (Class A 017125; Class C 017126) track the CSI HK Internet Index, with over 73% weight in top holdings like Alibaba and TENCENT—a concentrated play on AI cloud services and cross-sector applications. With assets exceeding CNY 10 billion and average daily turnover above CNY 600 million, the ETF offers T+0 trading without QDII quota constraints.

For investors seeking Hong Kong tech exposure with lower volatility, the Hong Kong Large-Cap 30 ETF (520560) employs a "tech + dividend" barbell strategy, blending growth names like Alibaba/TENCENT with stable yield plays (e.g., China Construction Bank, Ping An).

Warning: Recent market swings may persist. Short-term performance doesn't guarantee future returns. Investors must assess personal risk tolerance and manage positions prudently.

Index data: The CSI HK Internet Index recorded annual returns of +109.31% (2020), -36.61% (2021), -23.01% (2022), -24.74% (2023), and +23.04% (2024). Constituent changes reflect index methodology—past performance isn't indicative of future results.

Risk Disclosure: The ETF tracks the CSI HK Internet Index (base date: 2016.12.30; launched 2021.1.11). Holdings shown aren't recommendations nor reflect fund positions. Rated R4 (high risk) for aggressive investors (C4+). All data is for reference only—investors bear full responsibility for decisions. No liability is accepted for direct/indirect losses from using this content. Past fund performance doesn't guarantee future results.