At the beginning of 2026, Hong Kong stocks have emerged as a standout performer on the global stage. The rebound commenced immediately after the New Year holiday, with the Hang Seng Index reclaiming the 26,000-point mark on January 2nd. Market momentum has coalesced around the AI theme, intensifying the rally. By January 5th, leading technology stocks continued their strong advance: Kuaishou-W surged over 11%, Bilibili-W rose more than 5%, and Alibaba-W gained over 2%. The HK Internet ETF (513770), which holds significant positions in these internet giants, saw its market price jump 4.43%, decisively breaking above its 5-day, 10-day, and 20-day moving averages.
Notably, as the market broke upward, capital responded swiftly. Southbound capital recorded a net purchase exceeding HK$18.7 billion, marking the highest single-day inflow in nearly two and a half months. On the ETF front, data from the Shanghai Stock Exchange revealed that the HK Internet ETF (513770) attracted a substantial inflow of 104 million yuan in a single day, signaling robust optimism about future market prospects.
Analysis indicates that the current rise in Hong Kong assets is underpinned by fundamental support. Due to a lower weighting of traditional economic sectors compared to the A-share market, and against a backdrop of stabilizing domestic and external demand coupled with supportive macroeconomic policies since the second half of 2024, Hong Kong stock earnings have already shown signs of structural recovery, albeit temporarily disrupted by the phase-specific food delivery subsidy war.
Furthermore, the vast majority of core companies in strategically critical technology sectors for both China and the US are listed in Hong Kong. The growth trajectory of high-end manufacturing and technology is evolving from "single-point breakthroughs" to "multi-point explosions." Reflecting this in the capital markets, Hong Kong stocks are gradually shifting from their traditional pro-cyclical nature towards core tracks representing hard technology, such as AI applications, new energy, and semiconductors.
Industrial Securities noted that internet leaders are the vanguards in China's AI sector and are poised to benefit from coordinated buying by both domestic and foreign capital. As AI applications deepen, investors are likely to revise upward their long-term earnings growth expectations for these internet giants, potentially triggering a "Davis Double Play" involving both upward earnings revisions and valuation expansion. While the ratio of uncovered short positions in large tech stocks to the total number of issued shares has declined slightly, it remains at historically elevated levels. A continued appreciation of the Renminbi prompting foreign capital回流 could easily cause short covering to escalate into a "short squeeze" rally.
The HK Internet ETF (513770) and its feeder funds (Class A: 017125; Class C: 017126) passively track the CSI Hong Kong Stock Connect Internet Index. It holds significant positions in leading internet companies like Alibaba-W, Tencent Holdings, and Xiaomi Group-W. The top 10 holdings, which collectively account for over 73% of the portfolio, concentrate companies involved in AI cloud computing, large language models, and AI applications across various sectors, highlighting its pronounced leadership advantage. The HK Internet ETF (513770) boasts an average daily turnover exceeding 600 million yuan year-to-date, supports intraday T+0 trading, is not subject to QDII quota limitations, and offers excellent liquidity.
For investors bullish on Hong Kong tech but seeking to mitigate volatility, consider the market's first offering—the Hong Kong Large Cap 30 ETF (520560). It employs a "Tech + Dividend" barbell strategy, featuring holdings in high-beta tech stocks like Alibaba and Tencent Holdings, while also including stable, high-dividend payers such as China Construction Bank and Ping An Insurance. This makes it an ideal core holding for long-term Hong Kong market allocation.
A reminder: Recent market volatility may be significant, and short-term price movements are not indicative of future performance. Investors must make rational investment decisions based on their own financial situation and risk tolerance, paying utmost attention to position sizing and risk management.
Data Source: Shanghai and Shenzhen Stock Exchanges, etc. The annual price changes for the CSI Hong Kong Stock Connect Internet Index over the past five full years are: 2020, +109.31%; 2021, -36.61%; 2022, -23.01%; 2023, -24.74%; 2024, +23.04%. The index's constituent stocks are adjusted periodically according to its compilation methodology, and its past performance does not guarantee future results.
Risk Disclosure: The HK Internet ETF passively tracks the CSI Hong Kong Stock Connect Internet Index. This index has a base date of December 30, 2016, was launched on January 11, 2021, and its constituents are adjusted according to its rules. The mention of index constituents herein is 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-High Risk, suitable for Aggressive (C4) and above investors. Any information appearing in this article is for reference only, and investors are solely responsible for any independent investment decisions. Furthermore, any views, analysis, 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; invest carefully.
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