On the last trading day of October, Hong Kong stocks remained sluggish. By the close, the Hang Seng Index fell 1.43%, dropping below the 26,000-point mark, while the Hang Seng Tech Index declined over 2%. Major tech stocks saw notable corrections, with Alibaba-W dropping more than 4%, Tencent Holdings and Kuaishou-W falling over 3%, and Xiaomi Group-W sliding over 2%.

As a core AI investment tool in Hong Kong, the HK Internet ETF (513770), which heavily invests in leading internet stocks, closed 0.34% lower. However, it maintained a wide premium range during intraday trading, with a closing premium rate of 0.29%, indicating strong buying interest. Data from the Shanghai Stock Exchange showed that the ETF attracted a net inflow of RMB 335 million over the past five trading days.

Regarding short-term market performance, CITIC Securities noted that the post-summit index decline may reflect a "sell-the-news" adjustment. However, with trade-related uncertainties significantly easing, Hong Kong stocks could see improved risk appetite.

Reviewing October’s performance, the Hang Seng Index fell 3.53% for the month, while the Hang Seng Tech Index dropped 8.62%, and the Hang Seng Stock Connect Internet Index declined 10%, showing deeper corrections. Analysts suggest that Hong Kong stocks are now positioned favorably in terms of fundamentals, liquidity, and valuations.

Fundamentally, China’s 15th Five-Year Plan emphasizes technological self-reliance, with potential supportive policies ahead. Hong Kong’s market hosts rare tech giants like Alibaba, Tencent, and Xiaomi, whose AI-driven growth continues to gain traction.

Liquidity-wise, the Fed cut rates by 25 basis points for the second consecutive month and announced an end to balance sheet reduction starting December 1. This move may spur capital inflows into emerging markets, with undervalued Hong Kong stocks likely benefiting first. Additionally, southbound capital inflows have exceeded HKD 1.25 trillion year-to-date.

Valuation-wise, Hong Kong tech stocks appear highly attractive compared to global peers. The Hang Seng Stock Connect Internet Index trades at a P/E (TTM) of 25.2x, near the 27.68% percentile over the past five years—well below the Nasdaq 100 (36.79x) and ChiNext Index (42.39x).

JPMorgan noted that Hong Kong stocks remain among the cheapest in Asia ex-ASEAN, supported by multiple tailwinds, including sustained capital inflows amid de-dollarization narratives.

Looking ahead to November, China Merchants Securities expects the market to shift from consolidation to recovery, driven by three catalysts: the unexpectedly strong 15th Five-Year Plan, easing U.S.-China tensions, and reinforced Fed rate-cut expectations—with AI as a key theme.

The HK Internet ETF (513770) and its feeder funds (Class A: 017125; Class C: 017126) track the CSI HK Stock Connect Internet Index. Top holdings include Alibaba-W (19.22%), Tencent (16.46%), and Xiaomi-W (10.41%), with the top 10 stocks accounting for over 73% of the portfolio, highlighting its concentration in leading internet firms—a core AI asset in Hong Kong.

With assets exceeding RMB 11.4 billion and average daily turnover above RMB 600 million, the ETF supports intraday T+0 trading without QDII quota constraints, offering strong liquidity.

Investors are reminded that recent volatility may persist, and short-term performance does not guarantee future returns. Rational investment decisions should align with individual risk tolerance and capital conditions.

Data source: SSE, SZSE. The CSI HK Stock Connect Internet Index’s annual returns from 2020–2024 were 109.31%, -36.61%, -23.01%, -24.74%, and 23.04%, respectively. Index constituents are adjusted per its methodology, and past performance does not indicate future results.

Risk disclosure: The ETF passively tracks the CSI HK Stock Connect Internet Index (base date: Dec 30, 2016; launch date: Jan 11, 2021). Constituent stocks are for reference only and do not constitute investment advice or reflect fund holdings. The fund is rated R4 (higher risk) and suits aggressive (C4+) investors. All information herein is for reference only, and investors bear full responsibility for their decisions. No liability is assumed for direct or indirect losses arising from this content. Past performance of other funds managed by the issuer does not guarantee future returns. Investing involves risks.