Hong Kong stocks opened lower and traded in a volatile manner on June 10th, with leading internet companies showing divergent performance. Kuaishou-W (HKEX: 1024) shares rose nearly 4%, buoyed by strong results from its Kling AI platform. Meanwhile, the commencement of an internal beta test for the WeChat AI ecosystem, with Meituan-W (HKEX: 3690) among the first to gain access, helped push shares of Tencent (HKEX: 0700) and Meituan-W (HKEX: 3690) up by over 2% each. On the downside, Alibaba-W (HKEX: 9988) fell more than 3%, and Xiaomi Group-W (HKEX: 1810) declined over 4%.

The Huabao Hong Kong Internet ETF (513770), a key tool for accessing Hong Kong's AI and internet sectors, saw its intraday price drop by more than 2% at one point, nearing the low of the current correction cycle, and is currently down 1.6%.

Key Developments and Data

Kuaishou-W's Kling AI has released its latest operational figures. As of June 2026, its global user base has surpassed 100 million, a roughly 67% increase from the 60 million recorded at the end of 2025, with its services now covering 224 countries and regions. Concurrently, the number of enterprise clients for Kling AI has grown to nearly 50,000, also a 67% rise from the 30,000 at the end of 2025. According to Kuaishou's 2026 first-quarter financial report, Kling AI's quarterly revenue exceeded 6.5 billion yuan, representing year-on-year growth of over 300%. Its Annual Recurring Revenue (ARR) is approaching $500 million, having increased by nearly 400% within a year.

In other news, the WeChat AI ecosystem has opened for internal beta testing. Meituan-W announced it is among the first batch of teams to gain access, allowing users in the future to utilize WeChat AI to access local life services like Meituan's food delivery. Other life service platforms such as Ctrip and Tongcheng have also announced their integration into the WeChat AI ecosystem. Similarly, JD.com, also part of the first batch, has completed its access and will deploy WeChat AI Agents in scenarios including e-commerce, food delivery, and logistics.

Valuation Context for the Sector

Valuations for the Hong Kong internet sector appear to be finding a bottom. As of June 9th, the CSI Hong Kong Stock Connect Internet Index has declined over 40% since the correction began on October 3, 2025. Its trailing twelve-month price-to-earnings (PE) ratio stands at approximately 20 times, which is at a historically low level, around the 5.36th percentile over the past five years. (Note: The index's annual performance for the last five full years is as follows: 2021: -36.61%; 2022: -23.01%; 2023: -24.74%; 2024: 23.04%; 2025: 27.02%. The index's constituent stocks are adjusted according to its compilation rules, and its historical performance does not indicate future results.)

Analyst Perspective

Great Wall Securities noted that leading Hong Kong internet and AI application companies demonstrate strong earnings resilience and progress in AI business development. Companies like Tencent and Alibaba continue to intensify investments in AI models and product development. For instance, Tencent's AI agent products, CodeBuddy and WorkBuddy, have shown robust growth and high retention rates among active and paying users. Meanwhile, businesses such as gaming and advertising maintain strong growth, benefiting from AI empowerment. Alibaba's AI model and application services, including the Bailian MaaS platform, are expected to see their ARR exceed 30 billion yuan by year-end. The firm suggests focusing on subsequent opportunities involving shifts from high to low valuations and from hardware to software.

Investment Products Highlighted

Investors looking at the potential value reassessment of Hong Kong internet leaders amid the AI transformation may consider the Huabao Hong Kong Internet ETF (513770) and its feeder funds (Class A: 017125; Class C: 017126). This ETF passively tracks the CSI Hong Kong Stock Connect Internet Index. Its top ten holdings aggregate tech giants like Alibaba-W and Tencent alongside AI application companies across various sectors, offering significant exposure to industry leaders. The fund supports intraday T+0 trading with good liquidity.

For those optimistic about Hong Kong tech but seeking to mitigate volatility, the Huabao Hong Kong Large Cap 30 ETF (520560), the first of its kind in the market, offers a "tech + dividends" barbell strategy. Its major holdings include high-growth tech stocks like Alibaba alongside stable, high-dividend payers from the banking and insurance sectors, making it a potential foundational holding for long-term Hong Kong market exposure.

Important Investor Notices

Investors are reminded that recent market volatility may be significant, and short-term price movements do not predict future performance. It is essential to invest rationally based on one's own financial situation and risk tolerance, paying close attention to position sizing and risk management.

ETF and Fund Fee Information

For the Huabao Hong Kong Internet ETF (513770), subscription and redemption agents may charge a commission of up to 0.5%, which includes relevant fees charged by stock exchanges and registration institutions. For the feeder funds: The Huabao CSI Hong Kong Stock Connect Internet ETF Feeder Fund (Class A) has a front-end subscription fee structure: 1000 yuan per transaction for amounts over 2 million yuan; 0.6% for amounts between 1 million yuan (inclusive) and 2 million yuan; and 1% for amounts below 1 million yuan. Its redemption fee is 1.5% for holdings under 7 days and 0% for holdings of 7 days or more. It does not charge a sales service fee. The Huabao CSI Hong Kong Stock Connect Internet ETF Feeder Fund (Class C) does not charge a subscription fee. Its redemption fee is 1.5% for holdings under 7 days and 0% for holdings of 7 days or more. It charges a 0.3% annual sales service fee.

Risk Disclosure

The Huabao Hong Kong Internet ETF passively tracks the CSI Hong Kong Stock Connect Internet Index. The index's base date is December 30, 2016, and it was published on January 11, 2021. Its constituent stocks are adjusted according to its compilation rules. The mention of index constituents is for illustrative purposes only and does not constitute investment advice of any form, nor does it represent the holdings or trading intentions of any fund managed by the asset manager. The fund manager assesses this fund's risk level as R4 (Medium-High Risk), suitable for aggressive (C4) and above investors. Any information appearing in this article is for reference only. Investors are solely responsible for their independent investment decisions. Furthermore, any views, analyses, or forecasts herein do not constitute investment advice to readers, and no liability is accepted for any direct or indirect losses arising from the use of this content. The performance of other funds managed by the fund manager does not guarantee this fund's performance. Past fund performance is not indicative of future results. Fund investment carries risks, and caution is advised.