Zheng Quan Shi Bao·2025-11-19 18:01Core Viewpoint - The current valuation of the Hang Seng Index and the Hang Seng Tech Index remains significantly lower than their peaks in 2021, indicating potential investment opportunities in Hong Kong tech stocks driven by AI and globalization [1][4]. Valuation Analysis - As of late September, the price-to-earnings ratios for the Hang Seng Index and Hang Seng Tech Index were approximately 11.8 times and 23.7 times, respectively, compared to their peak values of 17.6 times and 70 times in 2021 [1][5]. - The Hang Seng Tech Index has experienced a significant bull market since 2025, with gains exceeding 30% for the Hang Seng Index and over 50% for the Hang Seng Tech Index [1]. Recent Market Trends - Since October, the Hang Seng Tech Index has faced a sharp decline, with a maximum drawdown exceeding 15% and a series of four consecutive trading days of losses [1][2]. - Prior to October, nine out of thirty constituent stocks in the Hang Seng Tech Index had gains exceeding 100%, with the top performer, Hua Hong Semiconductor, rising nearly 270% [2]. Fund Flow and Investor Behavior - There has been a noticeable outflow of southbound funds from certain Hang Seng Tech constituents, with Alibaba experiencing a net sell-off of 2.5 billion HKD and Li Auto seeing 1.2 billion HKD in net sales [2][3]. - Investors are increasingly shifting their focus towards dividend-paying assets like banks and non-bank financials as the year-end approaches, leading to a rotation away from high-volatility tech stocks [3]. Long-term Investment Logic - Despite short-term fluctuations, the long-term investment logic for the Hang Seng Tech Index remains intact, as it includes internet giants and companies in semiconductors and new energy vehicles that are considered scarce assets for both domestic and global investors [4][5]. - Analysts believe that the adjustment in the Hang Seng Tech Index is a short-term phenomenon, with expectations of a sustained bull market over the next two to three years [5]. AI and Market Dynamics - The focus has shifted from speculative narratives to tangible financial performance, with companies like Tencent and Alibaba demonstrating significant revenue growth attributed to AI applications [6][7]. - The market is now prioritizing companies that can translate AI advancements into profits, indicating a structural revaluation where only those with solid ecosystems will thrive [7]. Policy Support and Future Outlook - The Chinese government's emphasis on technology innovation in its 14th Five-Year Plan is expected to translate into actual performance over the next few years, providing a more sustainable growth trajectory for tech stocks [7].