In-Depth Investment Analysis Report on Hong Kong Stock Market Technology Sector

Based on collected market data, financial indicators, and technical analysis, we now present the complete investment analysis report on the Hong Kong stock market technology sector.

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January 14, 2026
Hang Seng Index up 0.92%, Hang Seng Tech Index up 1.54%, Southbound Capital Net Purchase of HK$791 million

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As of January 14, 2026, the Hong Kong stock market continues its strong rebound. The Hang Seng Index has risen from 25,945 points to 27,070 points in the past month and a half, with a cumulative increase of 4.33%, and volatility remains at a relatively low level of 1.04%[0]. The Hang Seng Tech Index has performed even stronger, with a cumulative increase of over 6.4% since 2026, indicating that the technology sector is becoming the leading engine of this round of market rally[1].

From a valuation perspective, the current trailing P/E ratio of the Hang Seng Index is 12.27x, which has increased compared to 11.77x at the beginning of 2026, but it is still within a historically reasonable range, with certain room for valuation repair[1].

[2]. This scale is the highest record since the launch of the Shanghai-Hong Kong Stock Connect and Shenzhen-Hong Kong Stock Connect, marking an unprecedented level of allocation to the Hong Kong stock market by mainland investors.

Key Data Points:

• As of the end of December 2025, the market value of holdings by southbound capital reached HK$6.140883 trillion, accounting for over 12% of the total market capitalization of Hong Kong stocks[2]
• Since 2026 (as of January 13), southbound capital has continued to record a net inflow of HK$41.296 billion[1]
• Net purchases exceeded HK$100 billion in 8 months throughout the year, with the highest reaching HK$188.518 billion in September[2]

The investment preferences of southbound capital are undergoing profound changes. From the perspective of changes in the market value of holdings, the healthcare sector saw an increase of 125.51%, indicating that innovative drugs and tech healthcare concepts are becoming new favorites of southbound capital[2].

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Alibaba Health closed at HK$7.58, surging 15.90%, with trading volume soaring to 433 million shares, a rare high volume level in recent times[0].

Indicator Category	Data
Market Capitalization	HK$122.04 billion
P/E (TTM)	45.07x
P/B	5.69x
ROE	14.45%
Current Ratio	2.71

The stock price is in a clear upward trend, with a breakout pattern formed pending confirmation. Key technical levels are as follows[0]:

• Resistance Level:
  HK$7.62 (today’s high)
• Support Level:
  HK$5.84
• Next Target Level:
  HK$7.90
• Beta Coefficient:
  1.67 (higher volatility than the broader market)
• Trend Judgment:
  Upward trend (pending confirmation), trend score 4.0

• The latest quarterly EPS is HK$0.09, exceeding market expectations by 5.17%[0]
• Quarterly revenue reached HK$19.82 billion, exceeding expectations by 10.16%[0]
• YTD increase is as high as 45.49%, with a 42.21% increase in one month[0]
• Current ratio of 2.71, indicating a sound financial position

The company adopts aggressive accounting policies, its free cash flow is weak, and its P/E valuation is on the high side[0].

Kuaishou closed at HK$82.75, rising 5.48%, with trading volume of 41.54 million shares, higher than the daily average[0].

Indicator Category	Data
Market Capitalization	HK$353.76 billion
P/E (TTM)	17.84x
P/B	3.89x
ROE	25.40%
Net Profit Margin	12.53%

The stock price is in a range-bound consolidation pattern[0]:

• Resistance Level:
  HK$84.51
• Support Level:
  HK$69.52
• Beta Coefficient:
  1.08 (high synchronization with the broader market)
• Trend Judgment:
  Sideways consolidation, no clear directional signal

• ROE as high as 25.40%, with outstanding profitability[0]
• Net profit margin of 12.53%, remaining stable for multiple consecutive quarters[0]
• 113.27% increase in one year, 11.22% increase in three years[0]
• Conservative accounting policies, with steady free cash flow[0]

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• The domestic 15th Five-Year Plan places technological innovation at the core[1]
• Several Measures to Support the High-Quality Development of Innovative Drugs was released, supporting the innovative drug industry from multiple dimensions including R&D, medical insurance, and clinical practice[2]
• The Hong Kong Stock Exchange continues to optimize its listing system to attract high-quality technology enterprises

• Compared with A-share tech stocks, the Hong Kong stock market technology sector still has a significant valuation discount[1]
• The AH Premium Index is at a periodic high, and the allocation increase behavior of southbound capital is inversely calibrated with the AH premium[2]

• The interest rate cut cycle has started at home and abroad, leading to a decrease in capital costs[1]
• The trend of household deposits shifting is expected to continue, with retail funds flowing into Hong Kong stocks through ETF channels[1]
• The inflow scale of southbound capital is expected to reach HK$750-980 billion in 2026[1]

• The Hong Kong stock market has a complete AI industry chain (infrastructure, software and hardware, applications)[1]
• Giants such as Alibaba Cloud continue to increase AI investment[2]
• Sectors such as semiconductors and innovative drugs are rotating upward, with abundant structural opportunities[1]

Sector	Investment Logic	Risk Level
Innovative Drugs/Tech Healthcare	Driven by both policy and technology, with substantial allocation increase by southbound capital	Medium
AI/Semiconductors	Global AI boom continues, Hong Kong stock market has a complete industry chain	Medium-High
Internet Platforms	Valuation repair + profit recovery, with obvious leading enterprise advantages	Medium
Consumer Technology	Domestic demand recovery + low valuation, with large repair space	Medium-Low

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The KDJ indicator shows a K value of 90.6, D value of 82.0, and J value of 107.8, which is in a severely overbought zone[0]. The RSI also indicates overbought risks, and there may be pullback pressure in the short term.

The KDJ indicator shows a K value of 83.4 and D value of 77.1, also in the overbought zone[0]. The stock price is close to the upper edge of the range, and a breakout requires volume support.

Risk Type	Alibaba Health	Kuaishou Technology
Valuation Risk	P/E 45x, relatively high	P/E 17.8x, reasonable
Accounting Policy	Aggressive (low depreciation)	Conservative (high depreciation)
Volatility	Beta 1.67, high	Beta 1.08, medium
Profit Visibility	Medium	Relatively High

• Macroeconomic Uncertainty:
  The slowdown in global economic growth may affect advertising and e-commerce businesses
• Regulatory Policy Changes:
  Uncertainties in regulatory policies for internet platforms and data security
• Geopolitical Factors:
  Changes in Sino-US relations may affect the valuation of tech stocks
• Liquidity Inflection Point:
  If the Fed’s interest rate cut expectations fail to materialize, it may affect global capital flows

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┌─────────────────────────────────────────────────────────────┐
│              Investment Allocation Recommendations for Hong Kong Stock Market Technology Sector                         │
├─────────────────────────────────────────────────────────────┤
│  Core Allocation (50-60%)                                         │
│    • Hang Seng Tech ETF (513180) —— One-click allocation to leading tech stocks               │
│    • Tencent Holdings (0700.HK) —— Leader in social networking + games + fintech           │
│    • Alibaba Group Holding - W (9988.HK) —— E-commerce + cloud computing giant                │
├─────────────────────────────────────────────────────────────┤
│  Satellite Allocation (30-40%)                                         │
│    • Kuaishou Technology (1024.HK) —— Short video track, reasonable valuation             │
│    • WuXi Biologics (2269.HK) —— CXO leader, benefiting from the boom in innovative drugs          │
│    • SMIC (0981.HK) —— Domestic substitution in semiconductors                   │
├─────────────────────────────────────────────────────────────┤
│  Trading Opportunities (10%)                                          │
│    • Alibaba Health (0241.HK) —— Short-term overbought, pay attention after pullback             │
│    • Innovative Drug Concept Stocks —— Driven by policy benefits, high volatility                  │
└─────────────────────────────────────────────────────────────┘

• Buying Opportunity:
  Wait for the stock price to pull back to the support range of HK$5.84-6.50
• Stop-Loss Level:
  HK$5.50
• Target Price:
  HK$7.90 (short-term), HK$8.50 (medium-term)
• Position Control:
  No more than 5% of the portfolio

• Buying Opportunity:
  Deploy when the price pulls back to the range of HK$70-73
• Stop-Loss Level:
  HK$65
• Target Price:
  HK$90
• Position Control:
  No more than 8% of the portfolio

1. Diversified Investment:
   Do not overweight any single stock, maintain a reasonable level of industry diversification
2. Phased Position Building:
   Use pyramid-style position adding to avoid heavy positioning in one go
3. Dynamic Position Adjustment:
   Set target return rates and stop-loss levels and strictly implement them
4. Position Management:
   It is recommended to control the overall position in the Hong Kong stock market technology sector at 30-40%

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The Hong Kong stock market technology sector is in the phase of “Davis Double Play” with valuation repair and profit recovery. The record inflow of HK$1.4048 trillion in southbound capital in 2025 has completely changed the capital ecology and pricing power pattern of the Hong Kong stock market[2].

• Short-term (1-3 months):
  The Hang Seng Tech Index has already achieved a large increase, and there is technical pullback pressure in the short term. It is recommended to deploy on pullbacks and avoid chasing highs.
• Medium-term (3-6 months):
  Against the background of loose liquidity at home and abroad and increased policy support, the Hong Kong stock market technology sector is expected to continue to oscillate upward. Innovative drugs, AI, and semiconductors are the core main lines.
• Long-term (6-12 months):
  The valuation advantages of the Hong Kong stock market technology sector, the availability of high-quality targets, and the continuous inflow of southbound capital will jointly support the long-term performance of the Hong Kong stock market.

Alibaba Health benefits from innovative drug policies and resource integration within the Alibaba ecosystem, while Kuaishou Technology has solid fundamentals and reasonable valuation. Both targets can be selected for allocation in the Hong Kong stock market technology sector, but attention should be paid to short-term overbought risks, and it is better to deploy at the right time.

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[0] Jinling AI Brokerage API Data

[1] China Securities Journal - Southbound Capital Continues to Inflow Since 2026, Institutional Insiders: Hong Kong Stocks Expected to Oscillate Upward(https://fund.eastmoney.com/a/202601143617902796.html)

[2] Securities Times Network - Epic Net Purchases Exceed HK$1.4 Trillion, Leading Tech Stocks See Heavy Increases in Holdings(https://www.stcn.com/article/detail/3568893.html)

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This report is for reference only and does not constitute investment advice. Investors should make independent investment decisions based on their own risk tolerance.