On May 27, the three major Hong Kong stock indices collectively declined, with leading internet stocks broadly falling. As of writing, Alibaba-W (09988.HK) and Xiaomi Group-W (01810.HK) were down over 2%, while Tencent Holdings (00700.HK) fell approximately 1%. The Hong Kong Internet ETF Huabao (513770), a core tool for accessing Hong Kong's AI and internet sector, saw its intraday price drop up to 1.81%, approaching the low of the current correction cycle.
Regarding recent developments, on May 26, Xiaomi Group released its Q1 2026 financial report. The company reported revenue of RMB 99.142 billion, a year-on-year decrease of 10.9%. Adjusted net profit, excluding one-off gains and losses, was RMB 6.072 billion, down 43.1% year-on-year. The report indicated that the company's overall revenue and profitability experienced a periodic adjustment, impacted by multiple external factors including weak global demand for consumer electronics, intensifying competition in a saturated market, and rising prices of key upstream components.
Concurrently, Xiaomi Group announced the formal launch of a share repurchase plan with a total scale of HK$20 billion, signaling management's strong confidence in the company's long-term value to the market.
From a valuation perspective, following the recent correction, sentiment towards leading Hong Kong internet stocks is nearing panic levels, having largely priced in pessimistic expectations. This suggests limited further downside potential, enhancing their investment appeal on a risk-reward basis. Data shows that the CSI Hong Kong Stock Connect Internet Index has fallen over 38% since its correction began on October 3, 2025. The index's latest price-to-earnings ratio (PE TTM) sits at a historical low, in the 4.46th percentile over the past decade, indicating significant safety margin and value.
China Merchants Securities notes that the AI industry trend remains clear. Capital expenditures, revenue guidance, and commercialization progress from leading companies like Alibaba and Tencent provide crucial valuation support for the tech sector. Hong Kong-listed internet platforms hold advantages in user access, data accumulation, cloud services, payment ecosystems, and enterprise customer bases. If AI can generate more definitive revenue contributions in scenarios such as advertising, e-commerce, gaming, office software, cloud services, and enterprise services, the Hong Kong AI investment theme could gradually shift from infrastructure-related plays to the realization of profits in application layers.
Investors are advised to monitor the potential revaluation of leading Hong Kong internet companies amid the AI-driven transformation. The Hong Kong Internet ETF Huabao (513770) and its feeder funds (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-W and Tencent Holdings alongside AI application companies across various sectors, offering significant exposure to industry leaders. The ETF features T+0 trading and good liquidity.
For investors bullish on Hong Kong tech but seeking to mitigate volatility, consider the Hong Kong Large-Cap 30 ETF Huabao (520560), the first of its kind in the market. It employs a "Tech + Dividend" barbell strategy, holding both high-beta tech stocks like Alibaba and stable, high-dividend-yielding stocks from sectors like banking and insurance, making it an ideal core holding for long-term Hong Kong market exposure.
Note: Recent market volatility may be elevated. Short-term price movements are not indicative of future performance. Investors must make rational investment decisions based on their own capital situation and risk tolerance, paying close attention to position sizing and risk management.
Data Source: Shanghai and Shenzhen Stock Exchanges, etc.
ETF Fee Information: When subscribing for or redeeming fund units, subscription/redemption agents may charge a commission of up to 0.5%, which includes related fees charged by stock exchanges and registration institutions. Feeder Fund Fee Information: For the Huabao CSI Hong Kong Stock Connect Internet ETF Feeder Fund (Class A), the subscription fee (front-end load) is RMB 1,000 per transaction for subscription amounts over RMB 2 million, 0.6% for amounts between RMB 1 million (inclusive) and RMB 2 million, and 1% for amounts below RMB 1 million. The redemption fee is 1.5% for holding periods under 7 days and 0% for holding periods of 7 days or more. No sales service fee is charged. For the Huabao CSI Hong Kong Stock Connect Internet ETF Feeder Fund (Class C), no subscription fee is charged. The redemption fee is 1.5% for holding periods under 7 days and 0% for holding periods of 7 days or more. The sales service fee is 0.3%.
Risk Disclosure: The Hong Kong Internet ETF passively tracks the CSI Hong Kong Stock Connect Internet Index. The index base date is December 30, 2016, and it was published on January 11, 2021. The index constituents are adjusted according to its compilation rules. Index constituents mentioned are for illustrative purposes only. Descriptions of individual stocks do not constitute investment advice in any form nor represent the holdings or trading动向 of any fund managed by the manager. The fund manager assesses this fund's risk等级 as R4 - Medium to High Risk, suitable for Aggressive (C4) and above investors. Any information appearing in this article (including but not limited to individual stocks, commentary, forecasts, charts, indicators, theories, and any form of表述) is for reference only. Investors are solely responsible for any independent investment decisions. Furthermore, any views, analysis, or forecasts herein do not constitute investment advice of any kind 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 the performance of this fund. Past fund performance is not indicative of future results. Fund investment involves risk; caution is advised when investing in funds.
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