Hong Kong-listed internet stocks have recently experienced a long-awaited rebound. Data shows that last week (July 6 to July 10), the CSI Hong Kong Stock Connect Internet Index surged by 7.94%, marking the largest weekly gain this year. Capital has clearly flowed back, with the HuaBao Hong Kong Internet ETF (513770) seeing net inflows for three consecutive days, totaling over 300 million yuan.
Southbound capital has significantly increased its deployment, with a weekly net purchase of 39.055 billion Hong Kong dollars, the highest level since April. Internet leaders saw notable buying, with Alibaba Group Holding Ltd (9988.HK) receiving net purchases of 8.318 billion HKD, Tencent Holdings Ltd (0700.HK) receiving 3.029 billion HKD, and Meituan (3690.HK) receiving 1.457 billion HKD.
Industry analysts point out that the current strong alignment between overseas incremental funds and southbound domestic capital, combined with multiple supportive factors such as the overall low historical valuation of Hong Kong stocks, ongoing policy support for the Hong Kong capital market, and a steady recovery in market fundamentals, suggests a potential window for valuation repair in the Hong Kong market.
As of July 10, the price-to-earnings ratio (PE TTM) of the CSI Hong Kong Stock Connect Internet Index was only 19.68 times, situated at the 5.94th percentile of its historical range over the past decade, indicating a bottom area. Against the backdrop of gradually emerging risks from crowded trades in the AI hardware sector, this has driven a global rebalancing of capital.
Beyond valuation advantages, the improving fundamentals of Hong Kong's internet leaders and rising expectations for value re-rating are further attracting sustained capital inflows. Internet giants represented by Tencent and Alibaba, leveraging their massive user bases and data moats, are seeing new opportunities for valuation reassessment as AI applications are implemented and cloud computing businesses accelerate breakthroughs.
Institutions note that the overall Hong Kong stock market in the second half of the year is expected to exhibit a pattern of "bottom consolidation and gradual recovery," with significant rotation in market structure. The focus of capital is likely to shift gradually from the previously hot hardware and computing power sectors towards AI applications and the revaluation of internet platform value.
CITIC Securities also stated that recent market performance indicates that the painful bottom may have passed. Corporate earnings expectations are stabilizing at the bottom: after rapid downward revisions following the earnings season, the bottom-up calculated earnings expectations for the Hang Seng Composite Index are showing signs of bottoming out. The expected profit growth rate for 2026 has fluctuated around 10% over the past month, suggesting that negative expectations have been fully priced in.
Focus on the Value Re-rating of Hong Kong Internet Leaders Amid AI Transformation
The HuaBao Hong Kong Internet ETF (513770) and its feeder funds passively track the CSI Hong Kong Stock Connect Internet Index. The top ten holdings include tech giants like Alibaba and Tencent as well as AI application companies across various sectors, showcasing significant leadership advantages. The ETF offers intraday T+0 trading with good liquidity.
An Alternative Strategy for Hong Kong Tech Exposure
For those bullish on Hong Kong technology but seeking to reduce volatility, consider the market's first product of its kind—the HuaBao Hong Kong Large-Cap 30 ETF (520560). It employs a "tech + dividends" barbell strategy, holding both high-beta tech stocks like Alibaba and stable, high-dividend stocks from sectors like banking and insurance, making it an ideal core holding for long-term Hong Kong market allocation.
Important Investment Considerations
Investors are reminded that recent market volatility may be significant, and short-term gains or losses do not predict future performance. Investors must make rational investment decisions based on their own financial situation and risk tolerance, paying high attention to position sizing and risk management.
ETF and Fund Fee Information
For the ETF, subscription and redemption agents may charge a commission not exceeding 0.5%, which includes related fees from stock exchanges and registration institutions. For the feeder funds: The Class A shares of the HuaBao CSI Hong Kong Stock Connect Internet ETF Feeder Fund have a front-end subscription fee of 1% for amounts below 1 million yuan, 0.6% for amounts between 1 million (inclusive) and 2 million yuan, and a flat 1000 yuan per transaction for amounts of 2 million yuan and above. The redemption fee is 1.5% for holdings under 7 days and 0% for holdings of 7 days or more. No sales service fee is charged. The Class C shares have no subscription fee, a redemption fee of 1.5% for holdings under 7 days and 0% for holdings of 7 days or more, and a sales service fee of 0.3% per annum.
Risk Disclosure
The HuaBao Hong Kong Internet ETF and its feeder funds passively track the CSI Hong Kong Stock Connect Internet Index (Base Date: December 30, 2016; Release Date: January 11, 2021). Index constituents are adjusted according to its rules. Constituent stocks mentioned are for illustrative purposes only; descriptions are not investment advice and do not represent the holdings or trading动向 of any fund managed by the 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. Investors are solely responsible for their investment decisions. The views, analyses, 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 manager does not guarantee this fund's performance. Past performance is not indicative of future results. Fund investment carries risks; invest with caution.
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