Is Hong Kong Stocks Hitting Another “Golden Bottom”?

Since early October, the Hang Seng Tech Index fell about 20%, yet mainland southbound funds and Hong Kong ETFs (e.g., Hang Seng Tech Index ETF 513180, Hang Seng Internet ETF 513330) have been buying on dips.

As of December 1, southbound fund net inflows into Hong Kong stocks reached nearly 1.3 trillion CNY, up 93% YoY, accounting for around 30% of Hong Kong main board turnover, supporting the market. Passive funds (ETFs) contributed about a quarter of the incremental southbound inflows, with Hang Seng Tech ETF circulating shares rising from 37 billion to 63.4 billion, a net increase of 11.6 billion shares.

Foreign investors remain underweight Hong Kong, with only 12% allocation versus a reasonable 25%+ benchmark, leaving room for future inflows. Fed officials have signaled dovish policy, pushing the probability of a December rate cut above 70%, supporting global risk assets including Hong Kong stocks.

On fundamentals, China’s macro policies promote a mild economic recovery: profits of large-scale industrial enterprises rose over 20% YoY for two consecutive months, and October CPI beat expectations. Hang Seng Tech valuation remains a global low, TTM P/E at 23.6x vs. 5-year median 27.7x, attracting mainland and overseas funds.

AI-driven tech stocks continue to break through: Alibaba, Tencent, and Meituan lead in AI, with open-source Qwen models widely adopted globally. The latest Qwen3-Max ranks among the top three worldwide. Despite breakthroughs and commercialization potential, Hong Kong stock valuations have not fully priced in AI prospects.

Overall, amid Fed easing, domestic economic recovery policies, and low valuations, Hang Seng Tech may present another “golden bottom.” Investors may consider Hang Seng Tech ETF (513180) and Hang Seng Internet ETF (513330) for exposure.