Overnight panic in U.S. markets spilled over, dragging Hong Kong stocks lower with AI-related sectors leading declines. Alibaba-W (09988.HK) plunged over 4% intraday before closing down 2.96%, while Xiaomi Group-W (01810.HK) fell more than 2%. Tencent Holdings (00700.HK) and Meituan-W (03690.HK) dropped over 1%. The Hong Kong Internet ETF (513770), a key AI tracker, slid below its annual moving average to its lowest since July 8, ending down 2.06%.

Notably, the ETF saw sustained premium trading, signaling strong dip-buying. Exchange data shows it has attracted net inflows for eight consecutive days, totaling HK$826 million.

The short-term volatility stems from overseas headwinds: Fed signals of higher bar for rate cuts boosted policy uncertainty, while Broadcom’s low-margin AI business and Oracle’s project delays triggered renewed “AI bubble” fears in U.S. markets.

Analysts view this as a valuation rebalance rather than trend reversal for AI. For Hong Kong stocks, the pullback presents buying opportunities. The CSI HK Internet Index tracked by the ETF has retreated 21.52% from its October 2 peak, with a P/E (TTM) of just 24.92x—near 5-year lows at the 27.24% percentile—showing clear valuation advantages over A-share (ChiNext) and U.S. (Nasdaq 100) tech peers.

Dongwu Securities notes Hong Kong remains pre-rebound, with current levels attractive for medium-to-long-term allocation. From now through January, selective tech growth stocks could lead a gradual uptrend.

Citic Securities highlights internet giants’ dual AI offensive/defensive appeal, combining cyclical recovery with AI upside. Their strong balance sheets also provide shelter if AI optimism fades.

The Hong Kong Internet ETF (513770) and its feeder funds (A-share: 017125; C-share: 017126) track the CSI HK Internet Index, heavily weighted in Alibaba-W, Tencent, and Xiaomi-W. Its top 10 holdings (73%+ weight) cover AI cloud, large models, and vertical applications. With over HK$10B AUM and average daily turnover exceeding HK$600M, it offers T+0 liquidity without QDII quota constraints.

For lower-volatility exposure, consider the Hong Kong Large-Cap 30 ETF (520560)—a “tech + dividend” barbell strategy blending Alibaba/Tencent with stable high-yielders like CCB and Ping An.

Warning: Recent volatility may persist. Short-term performance doesn’t guarantee future returns. Investors should assess risk tolerance and manage positions carefully.

Data: The CSI HK Internet Index’s annual returns: 2020 (+109.31%), 2021 (-36.61%), 2022 (-23.01%), 2023 (-24.74%), 2024 (+23.04%). Past performance ≠ future results.

Risk Disclosure: The ETF tracks the CSI HK Internet Index (base date: 2016/12/30; launched 2021/1/11). Constituent updates follow index rules. Stock mentions aren’t recommendations or indicative of fund holdings. The fund is rated R4 (higher risk) for aggressive (C4+) investors. All information is for reference only—investors assume full responsibility for decisions. No liability is accepted for direct/indirect losses from using this content. Past fund performance ≠ future results. Invest with caution.