On August 29th afternoon, the Hang Seng TECH Index saw its gains narrow. The largest A-share ETF tracking the Hang Seng TECH Index (513180) fluctuated alongside the benchmark index during trading. Among its holdings, Haier Smart Home, Horizon Robotics, Trip.com Group, Li Auto, Baidu Group, and BYD Company Limited led the gains.

Zheshang Securities noted that the liquidity withdrawal from the Hang Seng TECH may be approaching its end. The Hang Seng TECH Index has significantly underperformed in this market cycle. Beyond the impact of the "food delivery war" affecting profit expectations, the Hong Kong Dollar's persistent weakness against its convertibility undertaking has led to continuous liquidity withdrawal by the Hong Kong Monetary Authority, which may also be an important contributing factor.

Data shows that to stabilize the exchange rate, the HKMA has been continuously draining liquidity since the end of June. Currently, Hong Kong's interbank liquidity has essentially returned to normal levels, and the Hong Kong Dollar has appreciated significantly. The room for further marginal liquidity tightening in the future may be limited. Therefore, Hong Kong stocks may have catch-up potential going forward.

The Hang Seng TECH previously underperformed relative to A-share technology sectors. With improvements in the external liquidity narrative, its upward momentum could be stronger, potentially ushering in a "catch-up" rally. Investors without Stock Connect accounts may consider a one-stop allocation to China's core AI assets through the Hang Seng TECH Index ETF (513180). (Off-exchange feeder funds A/C: 013402/013403)