The Hong Kong stock market witnessed a robust rebound in leading internet stocks on June 2nd. TENCENT (HKEX: 00700)

shares soared by 10.46%, marking its largest single-day percentage gain since January 25, 2021. MEITUAN-W (HKEX: 03690)

jumped over 9%, while Alibaba Group Holding Ltd (HKEX: 09988)

and Kuaishou Technology (HKEX: 01024)

advanced more than 6% and 5% respectively. Xiaomi Corporation (HKEX: 01810)

also rose over 3%.

Focus on the Core AI Tools in Hong Kong Stocks

Following a significant volume-driven surge of over 3% the previous day, the HuaBao Hong Kong Internet ETF (513770), which is heavily concentrated in these leading internet companies, saw its on-exchange price climb another 4.43% today. The fund recorded a full-day trading volume of 12.92 billion yuan, indicating further increased activity. From a technical perspective, after hitting a new cyclical low on May 28th, the ETF has turned upward and posted gains for three consecutive days, potentially signaling a reversal point for recovery.

Catalysts Behind the Market Movement

The rally is driven by positive news from two major heavyweight constituents, Tencent and Meituan.

According to media reports, Tencent is advancing plans to launch an embedded AI agent within its WeChat super-app, with the public launch process potentially entering the required compliance review stage as soon as this month. During a recent earnings call, Tencent stated that "in addition to foundational models, AI agents are increasingly becoming breakthrough application scenarios." Analysts believe that as a super-app with 1.4 billion users, this move could reshape the competitive landscape for AI applications in China.

Furthermore, Meituan released its Q1 2026 results on June 1st. Its core local commerce segment reported an operating loss of 2 billion yuan, representing a significant reduction from the 10 billion yuan loss in the previous quarter. This may signal an accelerated end to the phase of intense, large-scale subsidy competition within the food delivery industry. Meituan also announced that its AI agent "Xiaomei" will soon launch a collaboration with Tencent's YuanBao, aiming to provide users with a one-stop platform for local life service transactions.

On another front, as the narrative of "AI disrupting software" has been challenged by strong corporate earnings, the recent rally in overseas tech stocks is broadening from AI hardware to application software. The Hong Kong internet sector, which holds significant positions in platform-based internet giants and AI application companies across various fields, had previously undergone a deep correction and now exhibits clear potential for a catch-up rally.

Valuation and Market Outlook

Data shows that as of now, the CSI Hong Kong Stock Connect Internet Index has declined over 34% since its correction began on October 3, 2025. Its current price-to-earnings ratio (TTM) is in the bottom 5.34% percentile of its range over the past decade, highlighting its attractive valuation. (Note: The index's performance over the past five full calendar years is as follows: 2021: -36.61%; 2022: -23.01%; 2023: -24.74%; 2024: 23.04%; 2025: 27.02%. The index composition is adjusted per its rules, and past performance does not guarantee future results.)

Analysts point out that the future focus of AI competition will shift towards building a systematic ecosystem. An ecosystem with efficient infrastructure (AI platforms), a continuous influx of users, and a thriving, innovative developer culture can create a significant competitive moat and deliver stable long-term commercial returns. Platform-based internet giants possess inherent advantages in constructing such AI ecosystems. It is anticipated that opportunities may emerge across multiple rounds in infrastructure, AI agents, and AI platforms.

Investment Vehicles for Exposure

The HuaBao Hong Kong Internet ETF (513770) and its feeder fund (Class A: 017125; Class C: 017126) passively track the CSI Hong Kong Stock Connect Internet Index. Its top ten holdings aggregate tech giants like Alibaba and Tencent alongside AI application companies from various sectors, offering significant exposure to leading players. The ETF also offers intraday T+0 trading with good liquidity.

For investors bullish on Hong Kong tech but seeking to mitigate volatility, the HuaBao Hong Kong Large Cap 30 ETF (520560) offers a "tech + dividends" barbell strategy. Its portfolio includes high-growth tech stocks like Alibaba alongside stable, high-dividend-paying names from the banking and insurance sectors, making it a potential foundational holding for long-term Hong Kong market allocation.

Market participants are reminded that recent market volatility may be elevated, and short-term performance is not indicative of future results. Investors should make rational investment decisions based on their own financial situation and risk tolerance, paying close attention to position sizing and risk management.