Group 1 - The Hong Kong stock market has seen significant growth in the first half of the year, with the Hang Seng Index rising by 23.76%, outperforming major global indices such as Germany's DAX and the UK's FTSE 100 [6][13][16] - The influx of southbound capital has been substantial, with a cumulative net purchase of 731.19 billion HKD through the Hong Kong Stock Connect, reflecting a year-on-year growth of 96.86% [6][10][11] - The primary drivers of the index's rise are the valuation recoveries in innovative pharmaceuticals and AI technologies, indicating a structural market rather than a broad-based rally [13][20] Group 2 - The technology sector in Hong Kong is expected to continue its upward trajectory, supported by stable earnings from leading companies and the potential for upward revisions in profitability as AI technologies become commercialized [14][20][22] - The current price-to-earnings ratio (PE) of the Hang Seng Technology Index stands at 20.84, which is relatively low compared to historical averages, suggesting room for growth [20][21] - The report highlights the increasing R&D expenditure in China, projected to reach 3.61 trillion CNY in 2024, which is expected to enhance the profitability of the technology sector [22][23] Group 3 - Mainland investors can participate in Hong Kong's technology sector through various passive investment vehicles, including QDII funds, Hong Kong Stock Connect funds, mutual recognition funds, and interconnectivity funds [26][27] - The majority of passive products tracking Hong Kong technology indices are linked to the Hang Seng Technology Index, which has the largest number of products and the highest total assets under management [28][30] - As of mid-2025, there are 33 QDII funds tracking technology-related indices with a total scale of 116.47 billion CNY, and 37 Hong Kong Stock Connect funds with a total scale of 106.96 billion CNY [27][28] Group 4 - The report compares various Hong Kong technology indices, noting that the Hang Seng Technology Index and the China Securities Hong Kong Technology Index do not have connectivity restrictions, allowing for a broader selection of stocks [33][36] - The Hang Seng Port Connect Technology Theme Index focuses more on traditional TMT sectors, indicating a higher concentration in specific industries compared to other indices [36][38] - The top ten constituents of the Hong Kong technology indices include major players like Xiaomi, Tencent, Alibaba, Meituan, and Kuaishou, reflecting a high concentration of significant technology firms [38][39]

Core Viewpoint - Despite recent adjustments in the Hong Kong stock market, several ETFs have seen increased investments as investors take advantage of the situation to accumulate positions [1][5]. Group 1: Market Performance - Since early 2025, the Hong Kong stock market has experienced a strong performance, with the Hang Seng Index rising over 30% and the Hang Seng Tech Index increasing by more than 40% from January 14 to March 19 [3]. - However, from March 20 onwards, the Hang Seng Index has declined nearly 6%, and the Hang Seng Tech Index has dropped nearly 9% due to profit-taking and external factors such as potential tariff issues [3][4]. Group 2: ETF Inflows - Several ETFs tracking the Hong Kong market, including the Southern Eastern Hang Seng Tech ETF and the Amundi Hang Seng Tech ETF, have seen significant increases in their fund shares during the recent market adjustments [1][6]. - For instance, the Amundi Hang Seng Tech ETF's shares increased from 12.40 billion to 17.30 billion in just four trading days, reflecting a rise of 4.9 billion shares [6][8]. - Similarly, the Southern Eastern Hang Seng Tech ETF's shares rose from 76.83 billion to 78.28 billion, an increase of 1.45 billion shares over the same period [10]. Group 3: Sector Analysis - Year-to-date, the net inflow of southbound funds into the Hong Kong stock market has been robust, with significant investments in non-essential consumer goods (1.151 billion HKD), information technology (972 million HKD), and financials (749 million HKD) [4]. - The market's focus has been primarily on technology stocks, with sectors such as the internet, semiconductors, and AI showing particularly strong performance [4]. Group 4: Future Outlook - Analysts believe that the underlying logic for the rise in the Hong Kong stock market remains intact, with expectations of continued growth in quality growth stocks and a favorable macroeconomic environment [16]. - The overall valuation of the Hong Kong market is currently near historical averages, suggesting that there is still potential for upward movement as economic conditions improve and liquidity remains favorable [16].