Xin Lang Ji Jin·2025-10-12 11:41Core Viewpoint - The Hong Kong stock market is experiencing significant volatility as it enters the fourth quarter, with major tech stocks facing declines, particularly in the internet sector, while there is a mixed outlook on future interest rate adjustments by the Federal Reserve [1][2]. Group 1: Market Performance - The Hang Seng Index has seen five consecutive days of decline, with the Hang Seng Tech Index dropping over 3%, and major internet stocks like Alibaba, Tencent, and Meituan also experiencing significant losses [1]. - The Hong Kong Internet ETF (513770) opened lower and closed down 3.41%, indicating active buying interest despite the market downturn [1]. Group 2: Economic Indicators - There is ongoing uncertainty regarding the Federal Reserve's interest rate decisions, with officials suggesting a cautious approach to future rate cuts, which adds to market volatility [2]. - Analysts expect that the upcoming earnings season will impact market sentiment, particularly due to lowered profit expectations for Alibaba following its investments in AI and instant retail [2]. Group 3: Investment Trends - Despite market fluctuations, there is a positive outlook for the Hong Kong stock market, with expectations of new highs driven by improved fundamentals and continued foreign capital inflow [3]. - The AI narrative in the internet sector is gaining traction, with Alibaba and Tencent making significant advancements in AI technologies, which could bolster long-term growth prospects [3]. Group 4: Fund Flows - Southbound capital has seen a record net inflow of 1.17 trillion HKD this year, with major internet stocks like Alibaba and Tencent being the primary beneficiaries [3]. - The Hong Kong Internet ETF has seen substantial net inflows, indicating strong investor interest despite market volatility, with a total net inflow of 909.1 million HKD over the past five days [3][9]. Group 5: Valuation Metrics - The Hong Kong Internet sector is showing resilience, with the CSI Hong Kong Internet Index outperforming the Hang Seng Tech Index, and its current P/E ratio of 26.69 is below historical averages, suggesting potential for growth [7]. - The index has demonstrated significant returns in previous years, with a notable increase of 56.63% year-to-date, indicating strong market performance relative to other sectors [7].