Sou Hu Cai Jing·2025-09-19 09:21Core Viewpoint - The Chinese internet sector has shown a remarkable recovery with a 47.77% increase since early 2023, reflecting a reassessment of its value and long-term potential by the market [1] Group 1: Market Performance - The Chinese internet ETF (KWEB) has risen by 47.77%, while the Hang Seng Internet ETF (2822) and Hang Seng Technology ETF (3080) have increased by 45.08% and 41.44% respectively [1] - The sector's recovery is attributed to a combination of market revaluation and recognition of its long-term potential [1] Group 2: Industry Challenges and Sentiment - Despite facing significant challenges, including regulatory pressures and a tough operating environment, investors have maintained a belief in the sector's eventual recovery [1][2] - The sentiment among investors remains optimistic, particularly with the anticipated impact of artificial intelligence on the industry [2] Group 3: Economic Environment - The recent decision by the Federal Reserve to lower the benchmark interest rate by 25 basis points to 4%-4.25% signals a shift towards a more accommodative financial environment, which is favorable for growth sectors like the internet [2] - In China, the 10-year government bond yield is at historical lows, and the overall monetary policy remains supportive, providing a conducive environment for the valuation of Chinese internet companies [3] Group 4: Valuation Metrics - The current price-to-earnings (PE) ratio for the Chinese internet sector is 21.65, which is relatively low compared to the historical average and indicates potential for recovery [3] - The price-to-sales (PS) ratio has doubled from 1.44 to 3.04, reflecting the sector's recovery potential [3] - Compared to other growth sectors, the Chinese internet sector maintains a valuation advantage, with a PE of 21.65 versus 24.67 for Hang Seng Technology and 23.11 for Hang Seng Internet [3]