Hang Seng Tech ETFs collectively rallied on Tuesday, driven by a shift in global capital flows away from US AI hardware stocks. CSOP Two Times Short-Term HSI (07226) surged 5.2% to HKD 3.642, while Hang Seng Tech ETF (03032) rose 2.67% to HKD 4.85. iShares Hang Seng Tech ETF (03067) climbed 2.61% to HKD 10.23, ChinaAMC Hang Seng Tech Index ETF (03088) gained 2.66% to HKD 6.185, and CSOP Hang Seng Index ETF (03033) advanced 2.54% to HKD 4.762.
The market moves follow a de-escalation in Middle East tensions between Iran and the US, which has pushed oil prices lower, dampening inflation expectations. As of July 28, the CME FedWatch Tool showed a 66.3% probability that the Federal Reserve will hold interest rates steady at its July meeting, with a 33.7% chance of a 25-basis-point hike. Analysts note that while the consensus remains for a "hawkish hold" at 3.50%-3.75%, the decline in oil prices has reduced the urgency for a September rate hike signal.
The weakening of the US AI hardware bubble has triggered a global capital rebalancing. This, combined with a strong rally in US-listed Chinese stocks overnight, created a "sentiment resonance" that has propelled Hong Kong tech assets into an independent upward trend. A Goldman Sachs report highlights that China's AI sector accounts for approximately 10% of global AI market capitalization and 16% of global AI revenue. However, mainstream global funds allocate only about 1.2% of their portfolios to Chinese AI stocks. This underweight positioning suggests significant room for capital inflows into Hong Kong core assets if foreign investors adjust their holdings.
Huatai Securities analyst Yi Heng observes that sentiment in the Hong Kong market has quickly recovered to near-neutral levels. Volatility in southbound flows, foreign capital, and short-selling data has all moderated. The current rebound is primarily driven by cross-market capital rebalancing, as investors in neighboring markets like South Korea unwind hedges and positions in leveraged ETFs and AI hardware. Additionally, long-only funds are rotating from high to low positions, creating a market dynamic where capital flows are a stronger driver than fundamentals.
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Hang Seng Tech ETFs Surge as Global Funds Rebalance from US AI Hardware: China's AI Sector Poised for Major Allocation
Stock News07-29
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