The Fed cut rates by another 25 basis points, triggering a higher open for Hong Kong stocks in early trading. Leading tech stocks initially rallied collectively before diverging. By the close, Meituan-W rose 1.5%, Xiaomi Group-W gained nearly 1%, while Bilibili-W and Tencent Holdings edged slightly below the flatline, and Alibaba-W fell over 1%.
The core AI tool for Hong Kong stocks—the Hong Kong Internet ETF (513770)—saw its intraday price surge over 1% before reversing to close down 0.56%. The ETF maintained a wide premium throughout the session, with the discount gap expanding further in the afternoon amid heightened trading volume, signaling strong buying interest. Exchange data showed the Hong Kong Internet ETF (513770) attracted net inflows for five consecutive days, totaling 238 million yuan.
Since October, Hong Kong’s tech sector has struggled, with the Hang Seng Tech Index dropping 13.68% as of December 10, underperforming the ChiNext Index. The Hang Seng Stock Connect Internet Index, which tracks leading internet stocks, fell even deeper—down 16.7%—with its P/E ratio now at just 25x, near a 10-year low at the 27.73% percentile, reinforcing its status as a "global tech valuation trough."
Meanwhile, internet giants like Alibaba and Tencent Holdings have deeply embedded themselves in global supply chains through AI models and cloud computing, transitioning from tech investment phases to value realization. However, their stock prices have yet to reflect these AI-driven breakthroughs.
Notably, Tencent Holdings swiftly resumed share buybacks post-Q3 earnings, signaling management’s view of undervaluation. As of yesterday, Tencent repurchased 17.584 million shares in November alone, spending over 10.8 billion HKD, while Xiaomi Group-W bought back 75.3 million shares for over 3 billion HKD—ranking as the top two Hong Kong-listed firms by buyback volume.
Historical data from GF Securities shows Tencent’s buybacks typically occur at low valuations, with lackluster short-term performance but strong gains six months to a year later.
On the AI front, Alibaba’s ecosystem achieved multiple milestones: Meta announced using Alibaba’s Qianwen model to optimize its latest AI system, while Alibaba Cloud launched the Agentic AI infrastructure platform, AgentRun. Earlier, the Qianwen App surpassed 10 million downloads in its first week of public testing, becoming the fastest-growing AI app ever.
CITIC Securities remains bullish on the internet sector’s cyclical recovery and AI upside, noting tech giants are well-positioned for AI disruptions—either as primary beneficiaries of breakthroughs or as safe havens if an AI bubble bursts, given their robust balance sheets.
Zhongtai Securities added that Hong Kong tech leaders now offer reasonable valuations, enhanced dividends/buybacks, and growing profitability elasticity amid Fed rate cuts and sustained southbound inflows.
The Hong Kong Internet ETF (513770) and its feeder funds (Class A 017125; Class C 017126) track the CSI Hong Kong Stock Connect Internet Index, heavily weighted in Alibaba-W and Tencent Holdings. Its top 10 holdings—spanning AI cloud computing, large models, and vertical AI applications—account for over 73% of the portfolio. With assets exceeding 10 billion yuan and average daily turnover above 600 million yuan, the ETF supports intraday 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) offers a "tech + dividend" barbell strategy, blending high-growth names like Alibaba and Tencent with stable dividend payers like China Construction Bank and Ping An.
Disclaimer: Recent market volatility may persist, and short-term moves don’t predict future performance. Investors should assess their risk tolerance and manage positions prudently.
Data source: SSE/SZSE. The CSI Hong Kong Stock Connect Internet Index’s annual returns: 2020: +109.31%; 2021: -36.61%; 2022: -23.01%; 2023: -24.74%; 2024: +23.04%. Index composition adjusts per rules; past performance doesn’t guarantee future results.
Risk warning: The Hong Kong Internet ETF passively tracks the CSI Hong Kong Stock Connect Internet Index (base date: 2016.12.30; launch date: 2021.1.11). Constituent stocks may change. Holdings shown aren’t investment advice or indicative of fund positions. The fund is rated R4 (higher risk) for aggressive investors (C4+). All information herein is for reference only—investors assume full responsibility for decisions. No liability is accepted for direct/indirect losses from using this content. Past fund performance doesn’t guarantee future returns; investing carries risks.
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